{"id":11074,"date":"2024-06-18T23:55:23","date_gmt":"2024-06-18T23:55:23","guid":{"rendered":"https:\/\/economicherald.net\/?p=11074"},"modified":"2024-06-18T23:55:23","modified_gmt":"2024-06-18T23:55:23","slug":"property-valued-at-up-to-12m-as-melodiol-secures-convertible-note-deal","status":"publish","type":"post","link":"https:\/\/economicherald.net\/?p=11074","title":{"rendered":"Property valued at up to $12m as Melodiol secures convertible note deal"},"content":{"rendered":"<p>Two independent appraisals value land and building owned by Melodiol\u2019s Canadian subsidiary Mernova at between $10.4 \u2013 $12 million<br \/>\nAppraisals follow strong revenue progress at Melodiol, with $21.6m in revenue delivered for FY23<br \/>\nME1 inks deal for up to $5m convertible note facility with Harbour Capital Opportunities Fund Pty Ltd<br \/>\nAs at close on 17 June 2024, ME1 had a market cap of approx. $1.09m, substantially lower than the appraised value of land and buildings at one subsidiary <\/p>\n<p>\u00a0<\/p>\n<p><strong><em>Special Report:<\/em> Melodiol Global Health says its Canadian subsidiary Mernova will use strong valuations of its land and building to attempt to simplify and improve the cannabis company\u2019s balance sheet. <\/strong><\/p>\n<p><strong>\u00a0<\/strong>In its latest corporate update <a href=\"https:\/\/stockhead.com.au\/company\/melodiol-global-health-me1\/\" target=\"_blank\" rel=\"noopener\"><strong>Melodiol Global Health (ASX:ME1)<\/strong><\/a> \u00a0says during May 2024, Mernova engaged two independent third party appraisal firms to ascertain the market value of its land and building.<\/p>\n<p>ME1 says after a significant review process, the firms valued the market value of the Mernova property in a range of $10.4m to $12m (C$9.5m to $11m), validating the significant investment it has made in this facility over the preceding years.<\/p>\n<p>ME1 says the appraisals are subject to several assumptions and contain a reasonable exposure time of three to six months.<\/p>\n<p>\u201cAs a result of the strong results, the company is considering strategic alternatives to utilise the land and building valuation to simplify and improve its balance sheet, including, but not limited to a sale leaseback transaction or a new secured loan,\u201d ME1 says.<\/p>\n<p>\u201cThe intention of this process would be to replace the existing secured noteholders with one group to simplify the structure of the company\u2019s balance sheet, and to pursue a lower interest rate than the current secured note structures and potentially provide additional working capital above and beyond the refinancing.<\/p>\n<p>\u201cThe company is reviewing the credentials of various well renowned groups for this purpose and expects to engage one of them in the near term.\u201d<\/p>\n<p>\u00a0<\/p>\n<h2><strong>Subsidiaries delivering strong value<\/strong><\/h2>\n<p>ME1 says the appraisals of Mernova\u2019s property underpin the value of its core operational subsidiaries, including Mernova and Health House International, which are driving the company\u2019s growth.<\/p>\n<p>HHI distributes medical cannabis in Australia and other medical products in Europe and was previously listed on the ASX prior to its acquisition by ME1 in May 2023.<\/p>\n<p>Mernova has been a particularly strong performer for ME1 as a licensed producer of cannabis products in Canada for sale under the Ritual brand banner.<\/p>\n<p>Cannabis is legalised in Canada for both medicinal and recreational use with ME1 saying Mernova has further growth potential.<\/p>\n<p>During FY23, ME1 generated $21.6m of revenue, a 148% increase on pcp,\u00a0 and during Q1 FY24, <a href=\"https:\/\/stockhead.com.au\/health\/melodiol-delivers-strong-revenues-in-q1-as-us-moves-to-reclassify-cannabis\/\" target=\"_blank\" rel=\"noopener\">the company generated $4.4m of unaudited revenue,<\/a> a 91% increase on pcp.<\/p>\n<p>ME1 says its strategy remains to focus on these business units in an effort to drive profitability as quickly as possible.<\/p>\n<p>\u00a0<\/p>\n<h2><strong>$5 million convertible note facility<\/strong><\/h2>\n<p>ME1 says it has also entered into definitive agreements for an up to $5m convertible note facility with Harbour Capital Opportunities Fund Pty Ltd (HCOF), subject to shareholder approval, which will be sought at an upcoming general meeting.<\/p>\n<p>The funds will be used to support marketing and sales of the company\u2019s existing products in Canada, Europe, and Australia, and general working capital. Proceeds of the issue may also be used to repay existing debt.<\/p>\n<p>ME1 says the new funding also provides the company with financial flexibility to continue its focus on sustained revenue growth and consistent operating expense reduction.<\/p>\n<p>\u201cWhile Melodiol pursues its objective of a cash flow positive state on an aggregate basis, it will require additional capital to pursue its strategic objectives,\u201d ME1 says.<\/p>\n<p>\u00a0<\/p>\n<h2><strong>\u2018Working hard to drive profitability\u2019<\/strong><\/h2>\n<p>CEO and managing director William Lay says ME1 is pleased to see the strong appraisal results for Mernova.<\/p>\n<p>\u201cThe group has seen significant step ups in revenue versus prior fiscal years and with our focus on core subsidiaries, we are working hard to drive profitability as soon as possible,\u201d Lay says.<\/p>\n<p>\u201cThe new convertible notes will be a source of capital that assists us in pursuing this objective.\u201d<\/p>\n<p>\u00a0<\/p>\n<p><em>This article was developed in collaboration with Melodiol Global Health, a Stockhead advertiser at the time of publishing. <\/em><em>\u00a0<\/em><\/p>\n<p><em>This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.<\/em><\/p>\n<p>The post <a href=\"https:\/\/stockhead.com.au\/health\/property-valued-at-up-to-12m-as-melodiol-secures-convertible-note-deal\/\">Property valued at up to $12m as Melodiol secures convertible note deal<\/a> appeared first on <a href=\"https:\/\/stockhead.com.au\/\">Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"<p>Two independent appraisals value land and building owned by Melodiol\u2019s Canadian subsidiary Mernova at between $10.4 \u2013 $12 million Appraisals follow strong revenue progress at <a href=\"https:\/\/economicherald.net\/?p=11074\" class=\"read-more-link\">[more&#8230;]<\/a><\/p>\n","protected":false},"author":0,"featured_media":11075,"comment_status":"","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-11074","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.8 - 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