US: Castle Brands moves to boost stability
Castle Brands has said it is in advanced discussions to receive a US$12.5m cash infusion, as the drinks group looks to make itself more secure.
Castle Brands, which has brands including Boru vodka and Limoncello, said today (9 October) that it was in talks with investors led by Dr Phillip Frost, to receive a cash infusion of between US$12.5m and $15.1m.
The proposal is designed to increase cashflow and reduce debt, in order to improve Castle Brands' stability.
"Although in the last 12 months the Company has made significant reductions in its cash-burn, the company's cash position has remained strained," Castle said.
The firm reduced its first quarter loss by 16% in its first fiscal quarter ended 30 June, it said in August. Full-year losses for its 2007/08 financial year deepened to $27.6m, from $16.5m a year earlier, however.
Under the infusion proposal, the group said it would issue and sell between 1m and 1.21m shares of newly created Series A Convertible Preferred Stock for a price per share of $12.50. Shareholders in subsidiary firm Castle Brands Corp would also transfer their shares.
This stock, Castle said, would then be converted to create between 78m and 85.6m shares of common stock, which would give that group of shareholders a collective 84% stake in the company.
Mark Andrews, Castle chairman, said: "The proposed transaction should place the company on a much firmer footing and allow the company to pursue its original vision of building its own premium brands and representing other specialty brands."
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