HPC offers free options as US profitability supports A$1.43 million raise

Hydration Pharmaceuticals Company Limited (ASX:HPC) is seeking up to A$1.435 million from shareholders to keep its turnaround funded, with 89% of the gross proceeds earmarked for working capital. The capital raising arrives after the company reported that its US entity recorded a monthly EBITDA profit in August, following a sharp reduction in costs outlined in its August US profitability update.

The non-renounceable offer gives eligible Australian and New Zealand shareholders the right to buy two new shares for every three held at A$0.004 per share. Each two new shares subscribed for carries one free option, exercisable at A$0.006 and expiring on 30 June 2029. The issue price represents a premium of approximately 33% to HPC’s five-day volume-weighted average price to 22 October, although the shares last traded at A$0.003.

Working Capital Raise Carries No Minimum Subscription

HPC intends to allocate A$1.277 million to working capital and general corporate needs if the offer is fully subscribed, while estimated offer costs consume A$157,395, or 11% of the gross proceeds. Those costs include A$86,078 in lead-manager fees, excluding a potential A$6,500 monthly investor-relations retainer that becomes payable only if at least A$1 million is raised.

Harbour City Corporate is managing the offer, but has not underwritten it. There is also no minimum subscription, meaning the raising can proceed regardless of how much shareholders commit. If the company raises materially less than its target, the prospectus says discretionary spending may be deferred and further funding could be required. HPC identifies its ability to continue as a going concern as a key risk, alongside its history of operating losses and concentration in the US market.

Dilution and Option Quotation Remain Key Variables

At full subscription, HPC would issue 358.7 million new shares, lifting shares on issue from 538.0 million to 896.6 million. A shareholder who does not participate could face dilution of up to approximately 40% if all other entitlements are taken up. The company also expects to issue up to 71.7 million options to Harbour City Corporate, subject to shareholder approval or an alternative issue under its placement capacity.

The new options are intended to be quoted on ASX, but quotation is not guaranteed. If the exchange’s requirements are not met, they will remain unlisted and untradeable on ASX. The offer opens on 2 November and closes on 16 November, with the new shares expected to begin trading on 24 November, subject to the indicative timetable.

Separately, HPC is targeting approximately 436 shareholders holding parcels worth less than A$500. Unless those holders opt out or build their holdings above the marketable-parcel threshold, their shares will be sold on-market at prevailing prices, with the company covering brokerage and transaction costs. The arrangement affects holdings representing approximately 3.47% of shares on issue and adds a small but visible piece of shareholder administration to the fundraising.