Can My Rewards International’s $4.1M Raise Secure ASX Reinstatement?

Background and Context

My Rewards International Limited (ASX – MRI), a technology company specialising in loyalty and rewards services, is undertaking a critical capital raising initiative through a pro-rata non-renounceable entitlement offer. This move comes after the company’s securities were suspended from trading on the ASX in October 2023 due to concerns over its financial condition.

The entitlement offer allows existing shareholders to acquire one new share for every two shares held at a price of $0.009 per share, aiming to raise up to $4.117 million. This capital injection is designed to satisfy key ASX reinstatement conditions and support the company’s ongoing operations.

Offer Structure and Underwriting

The offer is partially underwritten to the tune of $3.4 million by three significant stakeholders – Abreco Enterprises Pty Ltd, Nightfall Limited, and Mr Alexander Gold acting as Trustee for Klevo Trust. Both Abreco and Nightfall have committed to fully subscribe for their entitlements, providing a degree of certainty to the capital raise.

Alongside the entitlement offer, the company proposes a debt conversion plan, subject to shareholder approval, to convert approximately $2.19 million of accrued liabilities into shares at the same issue price. This conversion includes unpaid director fees, director loans, and third-party loans, which will reduce the company’s debt burden and strengthen its balance sheet.

Use of Funds and Strategic Outlook

The proceeds from the entitlement offer are earmarked primarily for debt reduction, marketing initiatives, working capital, and covering the costs associated with the offer. The company has outlined a financial strategy focused on improving gross margins by removing loss-making product lines, implementing cost reductions through automation and AI efficiencies, and diversifying revenue streams via B2C and B2B expansions.

My Rewards International is also advancing its Klevo Rewards Card and Frankly Marketing Services as part of its scalable international growth plans. The board believes that with the successful completion of the offer and debt conversion, the company will have sufficient working capital to meet its objectives for the next 12 months.

Risks and Challenges Ahead

Despite the capital raising efforts, the company faces significant risks. The most immediate is the risk of automatic delisting from the ASX on 2 October 2025 if reinstatement conditions are not met or extended. The company’s financial reports have highlighted material uncertainties regarding its ability to continue as a going concern without additional funding.

Shareholders should also be aware of potential dilution, as non-participation in the entitlement offer and the debt conversion will reduce their holdings by approximately 33%. The company is also navigating ongoing litigation, regulatory compliance challenges, and operational restructuring considerations, including the possible voluntary administration of its subsidiary, My Rewards Pty Ltd.

Governance and Shareholder Implications

Directors have interests aligned with the offer, with Mr Alexander Gold set to receive shares and options subject to shareholder approval. The underwriting arrangements have been structured to mitigate control impacts, with priority given to eligible shareholders in the allocation of any shortfall shares.

The company emphasizes that the offer is highly speculative and encourages shareholders to seek professional advice before participating. The success of the entitlement offer and debt conversion is pivotal to the company’s reinstatement on the ASX and its future viability.