Papyrus Australia has tapped related party L39 Capital to lead a capital raise and secured an interest-bearing $200,000 loan from Irwin Biotech, with conversion into shares and options pending shareholder approval.
- Related party L39 Capital appointed lead manager
- Up to $200,000 unsecured loan from Irwin Biotech
- Loan converts to shares at $0.01 subject to approval
- Options granted to L39 and Irwin Biotech on conversion
- Funds to support biodegradable product contract and working capital
Related Party Loan and Capital Raising Engagement
Papyrus Australia Ltd (ASX:PPY) has formalised a new funding arrangement involving related parties that will underpin its commercialisation push. The company engaged L39 Capital Pty Ltd, a related entity, as lead manager for a capital raising. Concurrently, PPY entered into a loan agreement with Irwin Biotech Nominees Pty Ltd, also a related party, for an unsecured, interest-bearing loan facility of up to $200,000.
The loan carries a monthly interest rate of 1.5%, with the principal and accrued interest set to convert into ordinary shares at $0.01 per share, conditional on shareholder approval. In addition, Irwin Biotech will receive one option for every two shares issued on conversion, exercisable at $0.015 and valid for three years.
Incentives for Lead Manager and Shareholder Approval
L39 Capital’s role extends beyond securing the loan, as it is also tasked with managing a further capital raising, currently in advanced discussions. For its services, L39 will earn a 6% success fee on gross funds raised under both the loan and any subsequent capital raising, payable in cash.
Furthermore, subject to shareholder approval, L39 will be granted 3,333,333 options related to the Irwin Biotech Loan, exercisable at $0.015, expiring in three years. For any further capital raising, L39 will receive one option for every six notional shares issued, with an exercise price set at 150% of the relevant issue or conversion price.
Use of Funds to Advance Commercial Contract
The funds accessed through the Irwin Biotech Loan will directly support PPY’s ongoing commercialisation activities and delivery of a contract with TBS Mining Solutions Pty Ltd. This contract involves manufacturing and supplying a biodegradable variant of the patented Collar Keeper® products, a key focus for PPY’s industrial biodegradable product segment.
These financial measures aim to bolster the company’s operational capacity and ensure continuity as it scales up production. This comes after Papyrus recently achieved significant milestones in product delivery and contract execution, including the delivery of 200 biodegradable samples to TBS Mining Solutions, confirming manufacturing scalability.
Shareholder Approval and Repayment Terms
The conversion of the loan and issuance of options to Irwin Biotech and L39 require shareholder approval under ASX Listing Rule 10.11, which PPY plans to seek at its 2026 Annual General Meeting. Should approval not be granted by 1 December 2027, the outstanding loan and accrued interest will become repayable within 30 business days.
This arrangement represents a continuation of PPY’s strategy to leverage related party support to maintain funding momentum while advancing its biodegradable product commercialisation.
Bottom Line?
Papyrus strengthens its funding base with related party facilities, but shareholder approval will be the key trigger for conversion and dilution.
Questions in the middle?
- Will shareholders approve the conversion and option grants at the upcoming AGM?
- How will the further capital raising negotiations with L39 Capital conclude?
- What impact will these related party arrangements have on PPY’s share structure and investor sentiment?