Hydralyte USA to Raise $1.25 Million Through Strategic Placement and Rights Issue

Highlights:

• $220 million Capital Raise: SkyCity Entertainment (ASX: SKC) is raising NZ$220 million through an entitlement offer to strengthen its financial position amid regulatory challenges.
• Regulatory and Tax Uncertainty: The company faces a potential NZ$46 million fine from AUSTRAC and a dispute with the NZ Inland Revenue Department over tax obligations.
• Shareholder Impact: Eligible shareholders can participate in the 1-for-8.86 entitlement offer at NZ$1.30 per share, a 15.6% discount to the last trading price.

Strategic Capital Raise to Strengthen Financial Position

Hydration solutions company The Hydration Pharmaceuticals Company Limited (ASX: HPC), also known as Hydralyte USA, has announced a capital-raising initiative to support its ongoing operations and expansion in the US market. At the time of writing, the company has secured firm commitments to raise $650,000 through a strategic placement and is planning an additional 1-for-5 rights issue to raise up to $610,000, bringing the total capital raise to $1.25 million.

Details of the Placement

Hydralyte USA will issue 65 million fully paid ordinary shares at an offer price of $0.01 per share, with 60 million shares allocated to Joseph Constable—an experienced executive and former Executive Director at Hancock & Gore—and the remaining 5 million shares to another investor. Upon completion of the placement, Constable will join the company's Board as a Non-Executive Director, further strengthening its leadership.

Rights Issue to Raise Additional Capital

The company will also conduct a pro rata entitlement offer, allowing existing shareholders to subscribe for 1 new share for every 5 existing shares held as of March 21, 2025. This rights issue is expected to generate up to $610,000 at the same offer price of $0.01 per share. Hydralyte USA’s largest shareholder, PURE, has already committed to subscribing for its full entitlement, contributing approximately $122,000.

Purpose of the Capital Raise

The funds raised through this initiative will be allocated to:

• Enhancing sales momentum from US operations, including new product launches.
• Expanding high-margin product offerings via established e-commerce channels.
• Streamlining operational costs, following the completion of a transition services agreement with Prestige Consumer Healthcare Inc.

Financial Performance and Outlook

As of January and February 2025, Hydralyte USA reported US$489,000 (~A$780,000) in net sales, reflecting a 19% increase compared to the same period last year. Additionally, gross margins have risen to 64%, up from 62% in CY2024. With a focus on cost efficiency and high-margin product expansion, management anticipates further profitability improvements throughout CY2025.

Conclusion

With a well-structured capital raise and strategic leadership appointment, Hydralyte USA is positioning itself for continued growth in the US market. The successful execution of its funding strategy will provide essential financial flexibility, ensuring a robust platform for expanding its high-margin product portfolio and achieving long-term sustainability.

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