Convertible Funding Deal Poses Dilution Risks for Harvest Technology Shareholders

Funding Agreement Overview

Harvest Technology Group Limited (ASX – HTG), a leader in network optimised remote operations, has announced a significant funding arrangement with RiverFort Global Capital Ltd. The agreement provides up to A$6 million through convertible securities and attaching options, designed to bolster the company’s working capital and underpin its strategic growth initiatives.

The first tranche of A$1.5 million is scheduled for immediate drawdown around 29 September 2025, with subsequent tranches of up to A$4.5 million available subject to shareholder approval. This staged approach offers Harvest flexibility while ensuring investor oversight on future capital raises.

Terms and Conditions

The convertible securities carry no interest except in default scenarios, and mature 24 months after issuance unless converted or redeemed earlier. The conversion price is set at the lower of a 15% premium to the reference price at drawdown or a 10% discount to recent volume-weighted average prices, balancing investor protection with shareholder value considerations.

Accompanying the convertible securities are attaching options exercisable at a 55% premium to the reference price, valid for 30 months. These options, issued without additional cash consideration, provide RiverFort with potential upside participation in Harvest’s equity appreciation.

Strategic Implications

Harvest’s CEO, Ilario Faenza, highlighted the facility as a strong endorsement of the company’s proprietary Nodestream platform and strategic direction. The funding is expected to support immediate business plans and provide a framework for accessing further capital to fuel growth, particularly in sectors like marine and defence where robust communications in challenging environments are critical.

RiverFort’s CEO, Gytis Martinkus, echoed this confidence, emphasizing the expanding addressable market and the importance of Harvest’s technology in limited connectivity and high-latency scenarios. The partnership positions Harvest to accelerate its growth ambitions with committed capital readily available.

Dilution and Shareholder Considerations

The funding agreement includes provisions for pre-issued shares and conversion limits to manage dilution. The maximum number of shares issuable under the entire facility is capped at 480 million, with the first drawdown potentially diluting up to 145 million shares. Shareholder approval will be required for further drawdowns and issuance of additional attaching options, ensuring governance oversight.

Security interests include a third-ranking charge over company assets and a first-ranking charge over the FY26 R&D tax incentive, reflecting prudent risk management. The agreement also contains customary covenants, including restrictions on new charges without investor consent and conversion limits tied to trading volumes.

Looking Ahead

This funding facility marks a pivotal step for Harvest Technology as it seeks to capitalise on market opportunities and scale its innovative remote operations solutions. The immediate injection of capital will provide operational runway, while the structured nature of the agreement offers a clear path for future financing aligned with shareholder interests.