Melodiol Global Health Limited

Corporate Update

Melodiol Global Health Limited (ASX:ME1) (‘Melodiol’ or ‘the Company’) is pleased to provide the following corporate update.


Highlights:

  • Two independent appraisals received for Mernova land and building, with values ranging from $10.4 million to $12.0 million (C$9.5 million to C$11.0 million)
  • Appraisals follow strong revenue progress at Melodiol, with $21.6m in revenue delivered for FY23 (a 148% increase on the PCP) and $4.4m of unaudited revenue for Q1 FY24 (a 91% increase on the PCP)
  • Health House group has been a strong contributor to group revenues since acquisition in FY23
  • Up to $5m convertible note facility entered into with Harbour Capital Opportunities Fund Pty Ltd
Mernova Valuation / Group Operational Progress

During May 2024, Mernova engaged two independent third party appraisal firms to ascertain the market value of the Mernova land and building. After a significant review process, these firms placed a market value on the Mernova property at a range of $10.4 million to $12.0 million. The Company is pleased with the result, which validates the significant investment it has made in this facility over the preceding years. The appraisals are subject to several assumptions and contain a reasonable exposure time of 3 to 6 months, further noting that that the estimate of market value is based on its continued operation for its intended use as a cannabis production facility. As such, 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 potential sale leaseback transaction or a new secured loan. The intention of this process would be to replace the existing secured noteholders with one group to simplify the structure of the Company’s 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. The Company is reviewing the credentials of various well renowned groups for this purpose and expects to engage one of them in the near term. The Company will provide further updates on this project in due course.

The appraisals underpin the value that the Company is driving at its core operational subsidiaries, Mernova and Health House. During FY23, the Company generated $21.6m of revenue (a 148% increase on the PCP) and during Q1 FY24, the Company generated $4.4m of unaudited revenue (a 91% increase on the PCP). The Company’s strategy remains to focus on these business units in an effort to drive profitability as quickly as possible.

Convertible Notes

Further to the Company’s announcement dated 21 February 2024, the Company is pleased to advise that it has entered into definitive agreements for an up to $5m convertible note facility with Harbour Capital Opportunities Fund Pty Ltd (“HCOF”). Full details of the convertible notes are set out in Appendix A. The issue of the HCOF convertible notes is subject to shareholder approval, which will be sought at an upcoming General Meeting.


Click here for the full ASX Release

This article includes content from Melodiol Global Health, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.

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