CSM cans rights issue, faces long wait for reverse listing

42 Below co-founder Grant Baker. Photo / NZ Herald.

Cashed up shell company CSM has canned its plans for a rights issue as it faces a long wait for its takeover and reverse listing plans to take effect.

CSM last week outlined a plan to buy The Good Brand Co, a sales and marketing business and Me Today, both of which operate in the health and wellness sector and which are backed by Grant Baker and Stephen Sinclair, who founded vodka company 42 Below.

The parties said in a statement they were preparing the notice of meeting for CSM shareholders, together with a profile document, as is requirted under NZX rules.

CSM said it expected to send transaction documents out to shareholders in mid-February, with a vote on expected by mid-March 2020.

Subject to the appropriate approvals being obtained, the completion date for the Transaction is expected to be 1 April 2020, CSM said.

CSM had previously announced that, in conjunction with the acquisition, the company was proposing to raise between $1m and $1.5m via a combination of a renounceable rights issue and a placement to wholesale investors.

"Unfortunately, due to the prevailing regulatory regime which applies to reverse takeover transactions, CSM Group has formed a view that the legislative framework precludes CSM Group from offering shareholders the opportunity to participate in a renounceable rights issue for a period of not less than three months after the date on which the Notice of Meeting and Profile document are released to the market," it said in a statement.

CSM Group had resolved, in conjunction with the stakeholders in The Good Brand Company and Me Today, to not proceed with the rights issue, and to restructure the capital raising initiative into a placement of not more than 300 million new CSM Group shares at an issue price of $0.005 per share, raising not more than $1.5m in aggregate from wholesale investors.

"CSM Group is disappointed that existing retail shareholders in CSM Group will not have an immediate opportunity to invest into the Company via the rights issue given the current regulatory framework applicable to the company," it said.

The NZX last week suspended the quotation of shares in CSM - which is part-owned by Sistema founder Brendan Lindsay - pending more information about its backdoor listing plans.