Snakk unveils capital-raising terms

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Mobile advertising technology company Snakk Media (NZAX: SNK)  is today launching a public equity offer for new and existing shareholders, which aims to raise up to $NZ2.3m. The offer opens on Monday 12 October and Snakk has applied to transition its listing to the NXT Market following the offer’s completion.

Through the offer, Snakk is aiming to raise $1.5 million by offering new ordinary shares at $0.045 per share, and will accept oversubscriptions up to an additional $0.8 million. This represents a discount of 8.2% to the closing share price for Snakk on 2 October and a 9.9% discount to the volume-weighted average share price for Snakk over the last 30 trading days.

All NZ resident investors can participate in the general offer, with an allocation preference available to existing shareholders listed on the Snakk share register by 5pm today (Monday). New investors will have until Friday 30 October to participate, with the Shareholder Priority Offer closing three days earlier, on Tuesday 27 October.

Funds raised from the offer will allow the company to recruit key expertise to accelerate growth in new and existing markets, successfully manage the associated setup costs and marketing programmes for Southeast Asia, continue its search for, and investment into, innovative and leading mobile advertising technologies, and see the company through to a cash flow positive position on its core operations.

Transition to the NXT
As Snakk enters its next phase of growth, the board believes NXT is a better market for Snakk due to its requirement for issuers to publish transparent Key Operating Milestones and the support received through NXT advisors and third-party research. Snakk’s Key Operating Milestones are revealed in today’s Offer document. It is expected that trading of the Shares on the NXT Market will begin 5 November, following the allotment of new ordinary shares issued under the Offer, subject to approval from NZX.

London-based Edison Investment Research is expected to publish its next review of Snakk’s performance and growth strategy on Monday 12 October, at the same time as the offer opens. The lead manager to the offer is Miro Capital Advisory Limited, which is also acting as the company’s NXT advisor.

Four new performance metrics
Today Snakk has revealed the four Key Operating Milestones to help investors assess the company’s performance: click-through rates, a measure used by the mobile advertising industry to assess the effectiveness of online advertising campaigns; gross margin and revenue to compensation ratio, which both assess operational efficiency and profitability; and staff turnover rates, a measure of team stability, important because Snakk’s people are integral to the company’s profitability and growth.*

newly appointed Snakk chair Peter James said:“With consistent revenue growth across multiple regions, excellent talent and market-leading technology, we are a much stronger business than when we listed two and a half years ago.” James has stated his intention to subscribe to the offer.

“During the past year we have continued to grow our team, evolve our technology portfolio and create a culture which is absolutely critical to our success. Importantly, we have continued to grow revenue, greatly improved our margins, and in the past nine months we’ve seen a significant decrease in our year-on-year rate of cash usage. We’ve demonstrated that we are capable of successfully executing our long-term growth strategy in a fast-moving industry.”

Snakk Group ceo Mark Ryan said: “Our operations are maturing rapidly across Australia and NZ, and our small team in Singapore is servicing an enormous Southeast Asian population that is over 25 times the size of Australia and New Zealand. Research indicates that rising markets like Southeast Asia will become the leading contributors to global ad market growth in 2016 and beyond. Part of the capital raised will fund our efforts to find the strongest talent and mobile advertising technologies so we can achieve our regional growth goals over next 12-24 months.”

An offer document providing full details of the share offer as well as an overview of Snakk and its business will be available from Monday 12 October at 10.30am here:

Investors will also be able to use apply for shares online through the website.

Investors are invited to join Ryan and James at a public forum on the day the offer opens (on Monday 12 October at 10.30am), where they will provide an overview of the business and the general offer, as well as answer questions from the investment community at NZX’s Auckland office (Level 7, Zurich House, 21 Queen Street).

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