NAB to forgive Funtastic debts following capital injection

NAB to forgive Funtastic debts following capital injection

While the demise of Toys R Us certainly took its toll on Funtastic (ASX: FUN), the toy manufacturer now aims to recoup its edge.

Funtastic announced on Monday that it has entered a trading halt, pending a capital raising round which the company says will pay down all its debts to the National Australia Bank (NAB).

An $8.2 million institutional placement and entitlement offer forms the basis of the capital raising, of which $5 million will be funnelled to NAB.

Funtastic says all the company's indebtedness to NAB will be forgiven following the $5 million payment.

"On completion of the capital raising, and after making of the debt reduction payment, Funtastic's balance sheet will be transformed giving it the financial flexibility to pursue a number of exciting commercial opportunities," says a company statement.

The capital raising is expected to kick off today and Funtastic says further details of the scheme will be revealed in an investor presentation to be released as soon as the trading halt is lifted.

In June, Funtastic dealt with the fallout from the closure of its fourth largest retail trading partner, Toys R Us.

Funtastic declared that the demise of Toys R Us would have an impact on its bottom line, adjusting its normalised earnings guidance from $3-3.5 million to $2.5 million.

Monday's trading halt is Funtastic's first share price-sensitive announcement since the revelation of its Toys R Us woes.

Also Joining Funtastic in a trading halt today are dairy manufacturer Bega Cheese (ASX: BGA) and integrated vet business National Veterinary Care (ASX: NVL).

It is reported by the Financial Review that National Vet Care is also pending a capital raising, expected to be worth around $15 million.

National Vet Care is only a week out from its latest acquisition of a clinic in New South Wales, taking the total number of its integrated vet businesses to 68.

The total cash consideration from last week's acquisition was $2.25 million.

Funtastic's previous closing price was $0.07, while National Vet Care last traded at $2.35 and Bega Cheese at $7.58.

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