Convertible Loan Raises Dilution Risks Ahead of Codeifai’s AGM
Codeifai Limited has raised $250,000 through unsecured convertible loans, positioning the company to accelerate platform development and marketing ahead of its upcoming AGM.
- Raised $250,000 via unsecured loans from s708 investors
- Loans carry 15% annual interest with 12-month term
- Convertible into shares at 25% discount post-8 May 2025 AGM
- Loan conversion subject to shareholder approval and existing capacity
- Funds earmarked for working capital, product development, and marketing
Funding Overview
Codeifai Limited (ASX: CDE), a digital brand solutions provider, has successfully raised $250,000 through unsecured loans facilitated by Oakley Capital Pty Ltd. The funding comes from s708 investors under a mandate arranged by Oakley Capital, which also acted as lead manager for the placement.
The loans carry a 15% per annum interest rate on the face value and have a 12-month term. Notably, the loans include a conversion feature allowing lenders to convert the debt into fully paid ordinary shares at a 25% discount to the 15-day volume weighted average price (VWAP) following the company’s Annual General Meeting (AGM) scheduled for 8 May 2025.
Conversion Terms and Shareholder Approval
Conversion of the loans into equity is contingent on existing 7.1 capacity or shareholder approval at the upcoming AGM. Each share issued upon conversion will be accompanied by one attaching option, exercisable at a 25% premium to the conversion price and expiring 12 months from issue. This structure aims to balance investor incentives with shareholder interests, though it introduces potential dilution risks.
Additionally, an establishment fee payable in shares is set at 9 million pre-consolidation CDE shares for every $20,000 loaned, further impacting the capital structure. Should the loans enter default, the interest rate escalates to 30% per annum, accruing daily, underscoring the company’s commitment to meeting its obligations.
Strategic Use of Funds
Codeifai plans to deploy the loan proceeds to support working capital needs, cover interest expenses, and invest in platform and product development alongside marketing efforts. This injection of capital is timely as the company seeks to scale its AI-powered brand solutions and deepen engagement with its client base.
Given Codeifai’s positioning in the digital brand solutions sector, this funding round reflects a strategic step to maintain momentum in a competitive technology landscape. The involvement of Oakley Capital as lead manager also signals confidence in Codeifai’s growth trajectory.
Looking Ahead
Investors will be closely watching the outcomes of the AGM, particularly regarding shareholder approval for loan conversion and option issuance. The company’s ability to execute on its development and marketing plans with this fresh capital will be critical to sustaining investor confidence and driving future value creation.
Bottom Line?
Codeifai’s convertible loan raises fresh capital but sets the stage for potential dilution and pivotal AGM decisions.
Questions in the middle?
- Will shareholders approve the loan conversion and attaching options at the AGM?
- How will the potential dilution impact existing shareholders’ value?
- Can Codeifai effectively leverage the funds to accelerate growth and improve profitability?
