Arnold Bloch Leibler (ABL) acted for Catuity Inc. on its Australian capital raising and strategic acquisition of Melbourne-based Loyalty Magic Pty Ltd, which ensured the company regained compliance with NASDAQ’s continuing listing requirements.
Catuity, a provider of point-of-sale focused solutions such as membership and loyalty card programs, is listed on both NASDAQ and the Australian Stock Exchange (ASX), but was under threat of being delisted from NASDAQ.
However, the company is confident that the completion of the capital raising, which was oversubscribed by $7 million, and acquisition, as well as the appointment of two new independent directors, will ensure its compliance with the regulations.
The capital raising was accomplished through the sale of common stock, which are traded as CHESS Depository Interests on the ASX. The dilution of existing Australian shareholders was minimised, as Australian shareholders were offered an opportunity to top up their shareholdings — more than one third of the capital raised was taken up by Australian investors.
ABL advised on the acquisition and on the prospectus and offer structure. Partner Michael Dodge led the team, which worked with Catuity’s US counsel David Warner and Lee Kellert of Jaffe Raitt Heuer & Weiss.
“The transaction raised a range of issues, given that Catuity is incorporated in Delaware and listed on both the ASX and NASDAQ,” Dodge said. “Accordingly, a number of mechanisms needed to be put in place to deal with the requirements of US securities law. As a consequence, the new CHESS Depository Interests will trade on the ASX under a different code for up to two years, as they are subject to the foreign ownership restriction of Regulation S of the United States’ Securities Act.”