Way2VAT’s A$1.3M Convertible Notes Could Dilute Shares by Up to 22%
Way2VAT has locked in A$1.3 million through convertible notes aimed at bolstering working capital and accelerating client expansion, pending shareholder approval for conversion.
- A$1.3 million raised via convertible notes from sophisticated investors and key shareholders
- Conversion into shares contingent on shareholder approval
- Funds primarily allocated to working capital and servicing financing facilities
- Convertible notes carry 10% annual coupon and mature in 24 months
- Potential dilution up to 22% of issued capital upon conversion
Way2VAT’s Strategic Capital Raise
Way2VAT Ltd (ASX:W2V), a global fintech leader in automated VAT refund solutions, has announced firm commitments to raise A$1.3 million through the issuance of unsecured convertible notes. The raise involves key shareholders, including three of the company’s top 10 investors, signaling strong insider confidence in the company’s growth trajectory.
The convertible notes, each with a face value of A$50,000, will be issued in tranches: A$550,000 around mid-January, A$250,000 in early March, and A$500,000 in April 2025. These funds are earmarked primarily for working capital needs and to service existing financing facilities, underpinning Way2VAT’s operational stability as it scales.
Conversion Terms and Shareholder Approval
Conversion of the notes into fully paid ordinary shares is subject to shareholder approval, a critical step that will determine the ultimate impact on the company’s capital structure. Upon conversion, shares will rank equally with existing shares, but investors should note the potential dilution effect, which could reach up to 22% of the issued share capital depending on the conversion price.
The notes carry a 10% per annum coupon and mature in 24 months, with automatic conversion on maturity if not converted earlier. Conversion prices are set at a 30% discount to the 30-day volume weighted average price (VWAP) prior to conversion, providing an incentive for noteholders while balancing shareholder interests.
Investor Confidence and Growth Outlook
Way2VAT’s CEO and Founder, Amos Simantov, expressed appreciation for the ongoing support from investors, highlighting that the funds will accelerate client acquisition and revenue growth. Combined with previously announced cost-cutting measures, this capital raise is positioned to help the company approach operating profitability in the near term.
With a patented AI-driven VAT reclaim platform serving approximately 375 global enterprise clients across 40 countries, Way2VAT is well-placed in the fintech VAT solutions niche. The fresh capital injection should provide the runway needed to deepen market penetration and enhance product capabilities.
Risks and Next Steps
While the convertible notes offer a flexible funding mechanism, the requirement for shareholder approval introduces an element of uncertainty. Failure to secure approval would trigger redemption obligations, including a premium payout, which could strain liquidity. Investors will be watching closely for the upcoming general meeting outcomes and any subsequent capital structure changes.
Overall, this raise underscores Way2VAT’s commitment to scaling its innovative VAT refund technology while managing financial prudence amid competitive pressures.
Bottom Line?
Way2VAT’s convertible note raise sets the stage for accelerated growth—but shareholder approval will be the pivotal next hurdle.
Questions in the middle?
- Will shareholders approve the conversion, and on what terms?
- How will potential dilution impact existing shareholders and share price?
- What milestones will Way2VAT target to achieve operating surplus post-funding?
