The Smarter Web Company PLC conditionally raises £10M in preferred offer
Net proceeds are about £8.3M, with £4M allocated to bitcoin and the first weekly dividend payable by Nov. 9.
Julian Okafor
A £10 million preferred-share offer would put £4 million into bitcoin purchases while adding weekly dividends to a treasury company's funding obligations. The Smarter Web Company PLC LONSWC OTCMKTSTSWCF, a UK web-services business with a bitcoin treasury, reported the conditional financing on Monday at £90 per preferred share.
The Oct. 12 result comprises £2.4 million from institutional investors and £7.6 million from retail investors. After expenses, the company expects approximately £8.3 million in net proceeds. Admission is expected on Oct. 14, with the first weekly dividend payable no later than Nov. 9.
The London Stock Exchange page displayed the ordinary shares at 63 pence before trading opened, as of 7:15 a.m. BST on Oct. 12.
The Oct. 12 notice allocates £4 million to additional bitcoin and £500,000 to operational business growth. Another £3,846,006 is earmarked for working capital and general corporate purposes, including cash reserves for dividends. The notice says admission is the remaining condition to the IPO.
The Offer Falls Below the Planned Range
The Sept. 29 launch targeted gross proceeds between £15 million and £25 million. The £10 million result is below that range, so the Oct. 12 notice sets out an adjusted allocation of net proceeds in the prospectus's order of priority.
Retail investors supplied most of the conditional proceeds. The Sept. 29 launch restricted the retail offer to investors resident and physically present in the United Kingdom, through participating brokers, wealth managers and investment platforms. The offer closed on Oct. 9.
Under the Oct. 12 terms, Smarter Web will issue 111,112 preferred shares for the IPO, conditional on admission. A further 100,000 shares will enter a facility for future market sales, separate from the IPO tranche. The shares will be held by or on behalf of Tennyson Capital Partners LLP, the partnership designated to sell them through its broker.
The Sept. 29 launch described the market-sales facility as a way to raise additional capital over time, subject to market conditions. Its existence therefore does not establish further proceeds beyond the offer result. Smarter Web already has a separate facility for sales of ordinary shares.
The First Dividend Has An Oct. 23 Record Date
The Oct. 12 notice sets the initial annual dividend rate at 12 per cent of £100 per preferred share. That equals £12 a year at the initial rate. Against the £90 offer price, the simple annual cash yield is about 13.3 per cent, calculated before taxes or rate changes.
The IPO tranche alone would carry approximately £1.33 million in annual dividends at that initial rate, calculated from the Oct. 12 share count. The board can vary the rate within the prospectus's parameters. Smarter Web's Oct. 1 update also says the board may suspend payments.
The first dividend will be £0.2301 per share, according to the Oct. 12 notice. Its ex-dividend date is Oct. 22 and record date is Oct. 23. The notice gives Nov. 9 as the latest payment date.
The preferred shares carry cumulative dividends and a liquidation preference, but no vote at a general meeting. The company's Oct. 1 quarterly update says the preference ranks ahead of ordinary shares. That gives the new class priority over ordinary shareholders while leaving the ordinary voting rights unaffected.
Bitcoin Sales Have Already Funded A Repayment
Smarter Web held 2,747 bitcoin at Sept. 30, according to its Oct. 1 update. The holding was down from 2,878 bitcoin at June 30. It acquired 46.89 bitcoin during the quarter. The treasury still shrank because the company sold bitcoin to repay its convertible instrument.
"The net reduction of 131 Bitcoin over the quarter reflects the disposal to repay the Smarter Convert instrument, partially offset by the purchases above," the company said in its Oct. 1 update.
The Sept. 29 launch listed operating cash flows, cash reserves, the bitcoin treasury and further ordinary or preferred-share issuance as potential sources for dividend payments. The new offer therefore adds a recurring funding requirement alongside the company's objective of accumulating bitcoin.
Smarter Web's treasury shrank as bitcoin funded a repayment, a financing route also tracked in Mugglehead's Oct. 10 report on weekly bitcoin output and sales.
Read more: Bitdeer Technologies Group sells all 300.6 BTC in weekly update
Strategy Inc NASDAQMSTR, the U.S. preferred-share issuer, lists a 12 per cent annual rate for one of its preferred classes in October. That class has two dividend periods a month, compared with Smarter Web's weekly record dates.
Smarter Web's immediate test is the expected admission on Oct. 14. The first dividend then moves through the Oct. 23 record date to the Nov. 9 payment deadline.
