Scalare Partners Issues Bonus Options to Limit Convertible Note Dilution

Bonus Options Designed to Offset Convertible Note Dilution

Scalare Partners Holdings Limited (ASX:SCP) has launched a strategic bonus option issue to eligible shareholders, granting 87 unlisted options for every 100 shares held as of 24 August 2026. This move is primarily aimed at cushioning shareholders from the dilution effects expected from the conversion of recently approved convertible notes, which could see a significant increase in the company's share count.

The bonus options come with an exercise price of $0.01, exercisable from 5 February 2027 until 31 March 2027. Each exercised bonus option also entitles the holder to a piggyback option, exercisable at $0.02 until 31 March 2028. These piggyback options provide an additional layer of potential upside for shareholders willing to participate fully in the offer.

Capital Raising Potential and Use of Funds

While the bonus and piggyback options themselves will not raise funds upon issuance, Scalare anticipates raising up to approximately $64,000 if all options are exercised. The proceeds, modest in scale, are earmarked for general working capital to support ongoing development and operational costs, including corporate administration, ASX fees, legal and audit expenses.

The company currently has 2.44 million shares on issue, with 314,698 options and 500,000 convertible notes outstanding. The bonus issue could add over 2.1 million bonus options, potentially increasing fully diluted securities to more than 7.5 million if all options and convertible notes are exercised or converted.

Convertible Notes and Dilution Risks

Scalare's convertible notes, approved recently, pose a dilution risk that the bonus options seek to mitigate. Depending on the extent of conversion, ranging from 5 million to 20 million notes, the existing shareholders’ stakes could be diluted by up to 89% in worst-case scenarios if options are not exercised. The bonus and piggyback options offer a partial shield, reducing dilution impact to between 40% and 80% depending on participation rates.

The company has disclosed that the initial tranche of $5 million convertible notes has been issued, with a further $4.5 million expected imminently. The total convertible notes could reach $25 million, subject to shareholder approvals and market conditions.

Directors’ Participation and Shareholder Eligibility

All directors have confirmed their intention to exercise both their bonus and piggyback options, signalling confidence in the company’s outlook. Eligible shareholders include those with registered addresses in Australia, New Zealand, Canada (Ontario and Alberta), France, Hong Kong, India, Laos, Singapore, the UK, the US (limited to institutional accredited investors), and Vanuatu.

The offer is non-renounceable, meaning shareholders cannot transfer their rights to others. The company will not seek ASX quotation for the bonus or piggyback options, which remain unlisted securities.

Risks Highlighted in the Prospectus

The prospectus underscores the speculative nature of the options and the inherent risks, including the possibility that shares issued upon exercise may not trade above the exercise price. Shareholders who do not exercise their options risk dilution as others participate. Additional risks include Scalare’s limited trading history, reliance on customer growth, potential loss of sponsorship agreements, acquisition integration challenges, and general market volatility.

Scalare is also exposed to the typical risks of an early-stage investment management business, including portfolio liquidity, key personnel retention, currency fluctuations, and regulatory changes. The company’s ability to raise further capital on favourable terms remains uncertain, adding another layer of risk.

Timing and Next Steps for Shareholders

The ex-date for the bonus issue is 21 August 2026, with the record date set at 24 August 2026. Bonus options must be issued by 31 August 2026. The exercise window for bonus options opens on 5 February 2027 and closes on 31 March 2027, while piggyback options can be exercised until 31 March 2028.

Shareholders should consider the offer carefully and seek professional advice, particularly given the speculative nature of the options and the dilution risks associated with the convertible notes. The company plans to remind shareholders to exercise their options to maximize protection against dilution.