Optiscan Launches $17.75M Fully Underwritten Share Offer at $0.085 Each

Entitlement Offer Details

Optiscan Imaging Limited (ASX, OIL), a medical device company specialising in advanced imaging technologies, has announced a pro-rata renounceable entitlement issue to raise up to approximately $17.75 million. The offer allows existing shareholders to subscribe for one new share for every four shares held at an issue price of $0.085 per share.

The entitlement offer is fully underwritten by Peters Investments Pty Ltd, currently Optiscan’s largest shareholder with a 28.23% stake. Should Peters Investments fully subscribe to its entitlement and underwriting commitment, its voting power could increase to a maximum of 38.84%, potentially shifting the balance of control within the company.

Purpose and Use of Funds

The capital raised will primarily support the company’s clinical and regulatory development programs. Nearly half of the proceeds, around $8.7 million, are allocated to clinical studies, testing, and certification of Optiscan’s medical devices, including its InVue®, InForm™, and InSpecta™ product lines. An additional $660,000 is earmarked for submission of documentation to secure US Food and Drug Administration (FDA) approvals, a critical step for commercialisation in the lucrative US market.

Further investment will be directed towards advancing the development of flexible endomicroscope technology ($4.2 million), preparing commercialisation plans ($1.73 million), and bolstering working capital ($2.37 million). The company estimates offer-related expenses at approximately $55,000.

Impact on Shareholders and Capital Structure

Assuming full subscription, the number of shares on issue will increase from 835.3 million to just over 1.04 billion. Shareholders who do not participate in the offer face dilution of approximately 20% of their holdings. The company has made provisions for a Shortfall Offer, allowing shareholders and other investors to apply for shares not taken up in the entitlement offer, with allocations at the board’s discretion.

Notably, the underwriting arrangement means Peters Investments may acquire additional shares if other shareholders do not fully participate, potentially consolidating its influence. However, the board considers it unlikely that only Orchid Capital Investments and Peters Investments will take up their entitlements.

Risks and Speculative Nature

Optiscan’s prospectus underscores the highly speculative nature of the investment. Key risks include dilution, potential shifts in control, regulatory approval uncertainties, and operational challenges inherent in medical device development and commercialisation. The company also highlights broader risks such as supply chain disruptions, competition, intellectual property protection, and the impact of global economic conditions.

Investors are cautioned to carefully consider these risks and seek professional advice before participating. The company’s forward-looking statements are subject to uncertainties and no assurance is given regarding future performance or share price movements.

Governance and Oversight

The offer has been authorised by Optiscan’s board, which includes Managing Director Dr Camile Farah and Non-Executive Chairman Mr Robert Cooke. Directors have indicated their intention to participate in the entitlement offer to varying degrees. The company’s legal advisers Steinepreis Paganin and nominee Canaccord Genuity (Australia) Limited are involved in the offer process, ensuring compliance with regulatory requirements.