LONDON (Alliance News) - Frontier Resources International PLC on Thursday unveiled plans to move into the UK healthcare industry by acquiring Concepta Diagnostics Ltd and launched a placing and open offer to raise GBP3.5 million.
Frontier shares were down 9.6% to 0.0520 pence per share on Thursday morning.
Frontier was founded in 2008 as an oil and gas exploration company but the firm disposed of all of its interest in the sector in March this year, converting the business into a cash shell under AIM rules. Frontier has to formally complete an investment by September 23 to avoid having its shares suspended.
The company plans to move in a completely new direction by acquiring Concepta Diagnostics, a UK healthcare company that has developed proprietary products and a platform which target the personalised mobile health market with a primary focus on women's fertility and specifically unexplained infertility.
Notably, fellow London-listed Mercia Technologies PLC released its own statement on Thursday regarding the deal. The UK technology investment company invested GBP400,000 via a convertible loan note into Concepta Diagnostics in May.
Frontier will complete the reverse takeover, if approved by shareholders, of Concepta Diagnostics for just over GBP3.0 million, settled mostly in shares alongside a cash payment of GBP750,120.
Over 30.3 million new shares will be issued to Concepta Diagnsotics at a price of 0.075 pence each to contribute GBP2.3 million toward the total acquisition price.
That issue price is over 30% higher than Frontier's closing share price on Wednesday.
Frontier will also acquire GBP650,000 of Concepta Diagnostic's debt, which will be converted into new shares in Frontier. That will settle the debt and also pay off GBP17,380 worth of accrued interest.
Importantly, the cash payment being made to the vendors of Concepta Diagnostics plan to use all of the GBP750,120 secured in cash to purchase more shares in Frontier through the associated placing and open offer that Frontier also launched on Thursday.
Prior to the proposed placing and open offer, which will raise a total of GBP3.5 million, Frontier plans to consolidate every 250 existing shares in the company into one new share.
Frontier will conduct a firm placing of 32.1 million now shares at the same issue price of 0.075 pence to raise GBP2.4 million. Importantly, Mercia Technologies is investing GBP1.0 million of that total and the GBP750,120 to be invested by the vendors of Concepta Diagnostics is included in that total.
Mercia Technologies shares were down 0.4% to 44.80 pence per share on Thursday.
A subscription for 1.4 million new shares at the same price will raise another GBP103,000, with three employees buying shares worth a total of GBP41,000.
The remaining GBP1.0 million will be raised through another placing of 13.8 million new shares, but that will also require shareholder approval before being completed.
The proceeds of the placing and open offer will be used to kickstart the new business. Frontier will change its name to Concepta PLC.
The GBP750,120 to be paid in cash by Frontier to the vendors of Concepta Diagnostics will be paid out of the proceeds.
Other proceeds will be used for marketing, product launches and development, setting up the manufacturing operation, app development, patents and for general working capital.
Frontier shareholders will vote on the deal on July 25 in London.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
Copyright 2016 Alliance News Limited. All Rights Reserved.
Mercia Asset (MERC)