Music streaming company Guvera has been forced to make 45 changes to its prospectus for its controversial $1.3 billion float, including revealing it would need to raise further cash within seven to nine months should it only raise its minimum $50 million target.
Guvera had originally planned to raise up to $100 million and a minimum of $40 million, which has now been increased to $50 million after ASIC last week moved to take a closer look at the company’s prospectus.
The company admitted in its replacement prospectus, released late on Thursday, it would still owe lenders $14.5 million should it raise the minimum $50 million, but it had commenced negotiations with the lenders should that scenario eventuate.
“The directors believe that Guvera would be successful in negotiating suitable arrangements with its lenders in order for the remaining amounts outstanding to be repaid over time,” the replacement prospectus said.
The company said in the replacement prospectus that should it raise the maximum amount it was seeking it would have the funds available to meet its business objectives, but a minimum raising would mean “Guvera will require additional funds within approximately seven to nine months from completion of the offer”.
Guvera’s IPO plan has come under fire, as has its funding model that has seen the company raise $185 million via AMMA Private Equity, which is partly-owned by Guvera chief executive Darren Herft.
Closing date shifts back
AMMA is also raising the capital for the float, will underwrite $10 million should $40 million be raised from investors, and will also receive 5.75 per cent of the funds raised.
Another estimated $450,000 to $600,000 will be payable in promotion and marketing costs to AMMA, which also receives $340,000 rent on Guvera’s Gold Coast headquarters.
Guvera raised the fees and costs associated with the offer to $7.6-11.5 million, compared with $6.6-11.3 million in the original prospectus. The closing date for investors has been extended to July 15 and trading of shares is expected to commence on July 25.
It also revealed details of a dispute with British company Omnifone, which has entered administration and served a statutory demand for $2.4 million on Guvera – which said an amount of $4.8 million regarding Omnifone’s position as a Guvera creditor was in dispute.
Guvera’s streaming platform has 14 million users in 10 countries, but unlike most subscription businesses, Guvera’s revenue strategy is focused on brands advertising on the platform, rather than subscribers.
It has 30 companies with branded channels including Goodlife Health Clubs, Dan Murphy’s and Mercedes-Benz Fashion Week.