Still in retailing and struggling toy chain, Funtastic has successfully raised $29 million from shareholders to buy the Hobby Warehouse Group at a cost of $32.6 million.
Funtastic told the ASX on Monday that the placement was well supported by existing and new investors.
Shares were issued at 11.2 cents, a massive 72% premium to the company’s last trading price of 6.5 cents.
Hobby Warehouse Group holds the license to popular toy brand Toys ‘R’ Us in Australia, along with developing logistics, marketing and brand development, debt repayment, and the development of ecommerce technology.
Toys ‘R’ Us collapsed in Australia in 2018 in the wake of the failure of its US parent.
Funtastic said it will issue 291 million shares at the 11.2c placement price, representing 34.43% of the total shares on issue.
As part of the placement, major shareholder Jaszac Investments Pty Ltd will convert a $6 million funding facility to equity.
Funtastic said the deal will also give it the opportunity to utilise unused tax benefits on its balance sheet, including $19.3 million in franking credits and $69.5 million in combined revenue and capital losses.
“We would like to thank both our existing and new shareholders for supporting this placement and proposed acquisition and, in particular, Jason Sourasis of Jaszac Investments who strongly supported the deal and placement,” chairman Bernie Brookes said in the statement.
“With a strengthened balance sheet, Funtastic is well-positioned to take advantage of the structural shift towards e-commerce for toys and hobby products while continuing to support and grow our ongoing wholesale agreements with our distribution and retail partners.”
Funtastic’s shares ended at 15.5 cents, up 138% from the 6.5 cents and generating nice fat profits for those who took up the shares in the placement.