Freshtel to restructure capital

Stuart Corner
Tuesday, 13 September 2005 18:59

IT Industry - Deals

VoIP services and technology company, Freshtel Holdings (ASX: FRE), has announced plans to convert its existing 93.9 million performance shares into 33.9 million convertible shares which would be convertible into ordinary shares at any time prior to 31 December 2008 on payment of $0.50 per share. This represents a 110 percent premium to the current share price of around $0.245, unchanged since the company announced plans to raise put to $12.25 million through the issue 50 million ordinary shares.
CEO, Michael Carew, said: "This capital restructure significantly reduces the dilutive nature of the performance shares. The conversion price of 50 cents per share highlights to shareholders and potential shareholders our confidence in the Freshtel business."
Freshtel Holdings has appointed Institutional stockbroker, BBY Limited and financial advisers, Hall Capital Strategies Pty Ltd to advise on the capital restructure and the current capital raising and the restructure is based on their advice.
The performance shares were allocated to the early shareholders and were to be issued subject to certain performance milestones being met The company would have had to be performing well for this to happen, but their issue would have had the effect of more than doubling the number of shares on issue, and halving the value of other shares. Under the new scheme, if all the convertible shares are taken up the company would get a $16.5 million capital injection.