GENETIC TECHNOLOGIES LIMITED (ASX:GTG) Entitlement Offer shortfall (Shortfall Offer) - CLOSED

GENETIC TECHNOLOGIES LIMITED (ASX:GTG) Entitlement Offer shortfall (Shortfall Offer) - CLOSED


Genetic Technologies Ltd (ASX: GTG / NDQ:GENE) 
Entitlement Offer - Shortfall Offer

Lodge Corporate, the Lead Manager, has invited Marketech Focus clients to participate in the Entitlement Offer shortfall (Shortfall Offer) for dual-listed med-tech company Genetic Technologies Ltd (ASX: GTG / NDQ:GENE). The minimum amount to be raised under the Entitlement Offer is $2.0 million (Minimum Amount), which is partially underwritten to $0.5 million. Eligible Shareholders will have the right to subscribe for New Shares (and corresponding New Options) under the 2-for-3 non-renounceable pro rata entitlement offer (Entitlement Offer), and we note that over 70% of the GTG register is held via American Depository Securities (ADS), which is expected to result in a shortfall.

GTG is a dual listed public company trading on the ASX (ASX:GTG) and NASDAQ (NDQ:GENE). The Company is seeking to raise up to a maximum amount of A$3.88 million before costs via the issue of up to 96,944,831 new fully paid ordinary shares in the capital of the Company (New Shares), pursuant to the terms of its prospectus dated 2 August 2024 (Prospectus), comprising:
•   A 2 for 3 non-renounceable pro rata entitlement offer (Entitlement Offer or Offer) at $0.04 per New Share (Issue Price) to existing eligible retail securityholders with a registered address in Australia or New Zealand (Eligible Shareholders); together with
•   1 free attaching unlisted new option in the Company (New Options) for every New Share issued under the Offer with an exercise price of $0.04 and expiry 2 years from the issue date.
•   The Issue Price for the New Shares represents a discount of:
      o  9.09% to the Company’s closing price on 25 July 2024 of $0.044;
      o  13.85% to the Company's 5 day VWAP of $0.0464; and
      o  50.54% to the Company’s 30 day VWAP of $0.081
•   Minimum subscriptions to be raised under the Offer is $2.00 million (Minimum Subscription Amount) and up to a maximum of $3.88 million (Maximum Subscription Amount).

Eligible Shareholders will have the right to subscribe for additional New Shares (and corresponding New Options) on the basis that some other existing shareholders will be either ineligible or may fail to take up their Entitlement (Top-Up Offer).

If there remains any shortfall (Shortfall) after allocation of the Entitlements to Eligible Shareholders and Top-Up Offer, the Directors reserve the right for up to 3 months after the close of the Entitlement Offer to place any Shortfall at the Issue Price (Shortfall Offer).

Please refer to the Prospectus and Term Sheet below.
Company Overview
GTG is a diversified molecular diagnostic company which distributes and sells genomics-based test kits for health, wellness and serious diseases. The company’s kits are sold under three different brands, geneType, EasyDNA and AffinityDNA.

geneType is a simple saliva test and is mainly sold B2B (B2C with medical supervision) to participants within the healthcare industry. The test is a risk assessment tool which gives a polygenic risk score derived from a subset of common genetic markers known as singular nucleotide polymorphisms (SNP) that are disease associated, covering 70% of all serious diseases including cancers, metabolic and cardiovascular. The polygenic risk is then integrated with other risk factors such as demographics and clinical measurements. The integration is what sets this test apart from other tests and has extensive patent protection.

EasyDNA and AffinityDNA sell DNA tests including lifestyle, health, and wellbeing genomics-based tests, plus animal testing relating to allergies and intolerances via online marketplaces, including Amazon. These tests are sold directly to the consumer and DIY with a short turnaround of 3-5 working days for results from receipt of samples.

The company recorded $7.665 million sales revenue in the 12-month period to 30 June 2024 (unaudited).


Strategic restructure and focus on USA sales growth
GTG announced a strategic restructure to the ASX on 26 July 2024 following an operations review. The Company intends to transition to a capital light operations model – which is anticipated to result in an immediate material reduction in operating costs. This capital light operations model is intended to focus on sales growth (particularly in the Company's largest market in the United States) and move the Company's operations to an outsourced / collaborations approach (rather than the more expensive current in house laboratory operations).
Strategic restructure – key highlights
•  Transition to a capital light business operations; with lower cost operations
•  Continued focus on the Company's core business of "EasyDNA" and "GeneType"
•  Working capital funded by short term $800,000 secured loan (from lenders including Directors)
•  Proposed Entitlement Offer to augment working capital
•  Active Channel partners in the USA with geneType sales growth
•  EasyDNA sales of $7m and growing
•  Move to high throughput laboratory in the USA to process up to 100,000 tests per month

The Company noted that the transition in the operating model was not expected to impact the Company's core business of EasyDNA and GeneType. The Company's existing partners, distribution channels and manufacturing capabilities would not be affected. In moving to a capital light operations model and the resulting costs reduction, the Company will continue to focus on its core businesses and revenue growth. EasyDNA and AffinityDNA project growth, EasyDNA currently turning over more than $7 million globally. The Company will seek to commercialise the GeneType serious disease risk test platform through new and established U.S. sales channels in the US.


Timetable (Dates & times are indicative only and may change without notice)

Acknowledgement

By clicking “Submit Bid” on the website form, you acknowledge and agree that:

  • You have read and understood the terms and conditions to access the electronic version of the Prospectus; 
  • You are an Australian resident and you are requesting a copy of the Prospectus from within Australia;
    OR
    If you are a non-Australian resident, you have consulted your professional adviser as to whether any governmental or other consents are required or whether any other formalities need to be considered and followed before accessing the Prospectus.
Marketech clients can bid for the offer by clicking the link below and including account number and bid amount/shares.

In order to be eligible for this allocation, you need to have:
  1. a current subscription to the Marketech Focus platform;
  2. a Marketech trading account number and HIN;
  3. a Macquarie CMA linked to your trading account
  4. read and understood the Prospectus;
  5. Bids under the Offer must be for a minimum of $2,000 worth of Shares (10,000 Shares) and thereafter, in multiples of $500 worth of Shares (2,500 Shares).
Please note:
  1. The Company and Lead Manager reserve the right to close the book early and to deem any bid invalid;
  2. All bids which have not been withdrawn by the closing time of the offer will represent irrevocable commitments  to subscribe for a number of Securities up to the maximum amount for which a bid is made and will be capable of acceptance in full or in part by the Lead Manager, at its discretion;
  3. Marketech will be paid a fee on amounts raised under this offer.


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