Butn’s $10M Funding Deal Raises Questions on Future Dilution

Butn’s Strategic Funding Move

Butn Limited (ASX, BTN), an innovator in the Australian business-to-business funding space, has formalised a $10 million corporate credit facility with Sydney-based Mighty Partners. This new funding arrangement, announced on 30 June 2025, is designed to provide Butn with flexible, non-dilutive capital to fuel its ongoing expansion and operational initiatives.

The credit facility is structured as a single drawdown with a 12-month term, carrying an interest rate of 13.5% per annum. Notably, interest will be capitalised monthly for the first six months, easing immediate cash flow pressures before switching to monthly payments thereafter. This approach reflects a tailored financing solution aligned with Butn’s growth trajectory.

Backing from Experienced Investors

Mighty Partners, the lender behind the facility, is supported by institutional capital and prominent entrepreneurs including Larry Diamond and Matt Leibowitz. Their confidence in Butn underscores the company’s strong positioning within the receivables and trade finance sector, a niche focused on helping small and medium enterprises manage working capital through transactional funding.

Kal Jamshidi, Managing Director of Mighty Partners, expressed optimism about the partnership, highlighting the strategic support and growth capital that will accompany the funding. This relationship is expected to bolster Butn’s capacity to scale its receivables book and enhance service delivery to its SME customers.

Implications for Butn’s Growth and Shareholders

For Butn, the facility represents a significant step in advancing its vision of providing seamless cashflow solutions to Australian businesses. Co-founder and co-CEO Rael Ross emphasised the value of Mighty Partners’ insights into Australia’s lending landscape and the customised nature of the funding, which together strengthen Butn’s operational and strategic capabilities.

In addition to the loan, the agreement includes a provision for the issuance of 8,333,333 unlisted options to Mighty Partners, exercisable at $0.12 per share and expiring in three years. This element is subject to shareholder approval and introduces a potential equity component that could impact future capital structure depending on market conditions and investor sentiment.

Security for the facility is comprehensive, with first-ranking fixed and floating charges over Butn’s wholly owned subsidiary Australian Factoring Company Pty Ltd, alongside guarantees from Butn and its subsidiaries. An establishment fee of $150,000 is payable upon drawdown, reflecting standard market terms for such credit arrangements.

Looking Ahead

This credit facility arrives at a pivotal moment as Butn seeks to capitalise on growing demand for innovative trade finance solutions in Australia. The non-dilutive nature of the funding preserves shareholder value while providing the necessary capital to scale operations and pursue strategic initiatives.

Investors will be watching closely how Butn deploys this capital and the outcome of the forthcoming shareholder vote on the options issuance. The partnership with Mighty Partners could mark a new chapter in Butn’s growth story, potentially setting the stage for further market expansion and financial performance improvements.