Shares of Farm Pride Foods Limited (ASX:FRM) dropped by 4% on Thursday (29 December 2022) to AU$0.12 per share (at 10:10 AM AEDT) after the company shared the finalised terms for a capital raise of AU$5.27 million.

In one month, the share price has fallen by 29.41%, and in one year, it has declined by 55.56%.

Farm Pride is a food, beverage and tobacco company that sources fresh eggs from its farms and local supplier across the nation. The company also manufactures egg products at its Keysborough Processing Plant.

About the FRM’s capital raise

FRM’s capital raise comprises a non-renounceable entitlement offer of seven new ordinary shares from every twelve existing ordinary shares owned by eligible shareholders at an issue price of AU$0.055 apiece to raise around AU$1.77 million.

Those shareholders will be considered eligible who are registered holders as of the record date of 4 January 2023 and have a registered address in New Zealand or Australia. Also, the shareholder should be eligible under all applicable securities laws and does not require to offer documents to be registered or lodged.

The capital raise also includes follow-up placement to professional, sophisticated and institutional investors by issuing ordinary shares at AU$0.055 apiece to raise proceeds of around AU$3.5 million.

The company said that if the capital raise is fully subscribed then around 32,188,435 new shares will be issued. If the placement gets the approval, then additional 63,636,364 new shares will be issued.

According to ASX announcement, the entitlement offer will open on 9 January 2023, and the closing date is 18 January 2023. By 25 January, the shares are expected to be allocated and commence regular trading by 27 January.

How will FRM use the proceeds from capital raise?

The group will employ the proceeds from the capital raise to provide funding for repairs, maintenance and working capital to existing infrastructure, invest in expanding processing capacity and farms and pay debts. 

What else?

FRM said in the ASX filing that after the completion of the placement, Darren Lurie would take up the role of managing director, and George Palatianos would take the position of non-executive director.

Lurie is a former non-executive director and non-executive chair of FRM who has returned to the company. Palatianos is the group CFO and experienced investment director. As reported, both are participating in the placement.