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Online bookseller Booktopia (ASX: BKG) has struck agreements to provide an additional $8.1 million in funding as it strives for a return to profitability in FY24, but the discount offered to investors has pushed shares to an all-time low of 14.5 cents per share (CPS) in early trading.
The share price also wasn't aided by a forecast $5 million underlying loss for FY23, the termination of a consultancy agreement with founder and non-executive director Tony Nash, or the resignation of director Steven Traurig which will be effective later this month.
Having already secured a $12 million package earlier this year to develop its customer fulfilment centre (CFC) in Strathfield in Western Sydney, Booktopia has rattled the tin again to support the site which is anticipated to be fully operational by late August, with any surplus going towards working capital.
The latest investment round involves firm commitments to raise $6.5 million through the issuance of more than 54 million ordinary shares at 12cps, accompanied by 27 million worth of options available to participants to to later buy shares at 23cps - a level well above the last closing price in FY23 of 16cps.
The option price is bullish in the context of BKG share's performance over the past month, although is more or less aligned with how they began the year. But if these options are exercised, the placement would represent a significant dilution at close to 60 per cent of the number of shares on issue in Booktopia's FY22 annual report.
And the second part of today's raise would dilute shares even further. The remainder of the $8.1 million in extra funding will come from a three-year extension to the company's AFSG loan with a partial debt to equity conversion of $1.6 million, subject to shareholder approval at an extraordinary general meeting (EGM).
The FY23 guidance release today also signifies a massive swing into negative territory from an underlying $6.2 million EBITDA profit for FY22.
This contrasts with the $12-15 million worth of annualised improvements to earnings that were highlighted in a strategy revamp earlier this year, just a few months before former Amazon and Barnes & Noble executive David Nenke took the reins as CEO in May.
Nenke's arrival was around a year after founder Tony Nash resigned as CEO. The founder was supposed to stick around in an alternative executive position but in July 2022 he was asked by the board to leave Bookopia's executive team and has since remained in non-executive role.
An agreement with the founder's Tachyon Ventures Pty Ltd will cease on 31 August.
Booktopia has also provided guidance for an underlying EBITDA of $13.5 million in FY24, due to "the realisation of the operating efficiencies and increased capacities of the Next Gen CFC".
"After two years of losses, completing the Next Gen CFC and with the other business improvement initiatives already announced will reset the cost base of the business," says Booktopia chairman Peter George.
"The raise will enable BKG to complete the Next Gen CFC by late August 2023. With the benefit of these initiatives, we expect a return to EBITDA growth from FY24."
At the time of publication, BKG shares are down 6.25 per cent at 15cps, which is also a level unseen for the company until today.
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