Sorbic acid and potassium sorbate producer Sorbic International has raised £1.6m to make up for £1.6m it has not yet received from an earlier loan note issue.
Sorbic has raised £560,000 from a convertible loan note and the rest from new shares issued at 20p each.
Seoul-based Hermes Holdings was supposed to subscribe for £1.6m worth of loan notes last August. Hermes requires regulatory approval to move the cash from South Korea and it has still not paid over the money to Sorbic.
The loan notes have the same repayment date as the existing loan notes – 26 February 2013 – and also have a 10% interest rate. The conversion price is 26p a share. The original loan notes will have their conversion price changed from 32p a share to 26p a share.
Last year, Sorbic completed the acquisition of land in Inner Mongolia for its new facility that will double capacity to 15,000 tonnes per annum. The total cost of construction will be around £10m.
Profits are likely to be flat this year with the benefits of the investment showing through in the year to September 2012 when a profit of £2.3m is forecast.
At 22.5p a share, down 3.5p, Sorbic is valued at £7.51m. The shares are trading on seven times prospective 2011-12 earnings although the fully diluted earnings figure depends on whether or not Hermes eventually subscribes for the loan notes.
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