Caravelle International Group Announces a Private Placement of up to $6.8 Million

Rhea-AI Summary

Caravelle International Group (CACO) announced a securities purchase agreement with institutional investors for $1.5 million in advance payment for a private placement of up to $6.8 million. The investment is in the form of a Senior Secured Convertible Promissory Note with an 18-month maturity, convertible into ordinary shares at an initial price of $1.00 per share. The net proceeds to the Company were approximately $1 million, intended for general working capital purposes.

Financial Analyst

Caravelle International Group's recent private placement of securities is a strategic financial maneuver that directly impacts the company's capital structure and liquidity. By securing an advance payment of $1.5 million, the company bolsters its immediate working capital, which is critical for sustaining operations and funding short-term obligations. The structure of the investment, particularly the Senior Secured Convertible Promissory Note, introduces potential dilution for existing shareholders, as it can be converted into ordinary shares at a predetermined price. However, this dilution is offset by the immediate injection of capital and the strategic flexibility it provides.

The involvement of institutional investors signifies market confidence in Caravelle's business model and future prospects. The warrants attached to the investment offer investors the opportunity to capitalize on future growth, which could signal an expectation of upward movement in Caravelle's stock price. The conditions attached to the subsequent tranches of funding imply a performance-based investment, which aligns investor interests with company performance.

From a financial perspective, the net proceeds of approximately $1 million, after deducting necessary expenses, provide a cushion for the company but also raise considerations about the cost of capital. The role of Maxim Group LLC as the sole placement agent suggests a targeted approach to the private placement, which might have influenced the terms of the deal.

Market Research Analyst

The private placement conducted by Caravelle International Group marks a significant event for stakeholders, as it reflects the company's strategic initiatives to secure funding without resorting to public markets. This move can be interpreted as a pursuit of operational flexibility, allowing the company to navigate market conditions with a stronger balance sheet. The decision to use the proceeds for general working capital purposes rather than specific projects suggests a broad focus on strengthening the company's overall financial health.

The convertible nature of the note and the attached warrants could be appealing to investors looking for both security and potential upside. The conversion price of $1.00 per share serves as a benchmark for current valuation perceptions and any adjustments to this price will be closely monitored by market participants for indications of volatility or changes in market sentiment towards the company.

Furthermore, the requirement for the company to file a registration statement for the resale of ordinary shares adds a layer of regulatory compliance and transparency, which could affect investor perceptions of risk associated with the securities. The conditional nature of additional funding tranches suggests a phased investment approach, potentially stabilizing the stock price by mitigating the risk of sudden capital influxes or dilution.

Legal Expert

The securities purchase agreement between Caravelle International Group and the institutional investors is a complex legal document that outlines the terms of the investment, the rights and obligations of both parties and the conditions under which the investment will proceed. The Senior Secured Convertible Promissory Note provides a legal framework for the investment, detailing the maturity, conversion rights, prepayment options and participation rights. This legal structure ensures that the investors have a secured position, which minimizes their risk and provides a clear pathway for potential conversion into equity.

The legal stipulation that requires the company to file a registration statement for the resale of the ordinary shares is a critical aspect of the agreement, as it ensures compliance with securities laws and provides transparency for the market. This filing will be scrutinized by regulatory bodies to ensure that all disclosures are adequate and that the interests of both the investors and the public are protected.

The agreement's provisions for additional tranches of funding contingent on certain conditions underscore the importance of legal compliance and performance metrics in the ongoing relationship between the investors and the company. Such legal mechanisms are essential in maintaining investor confidence and ensuring that the investment is conducted in accordance with the prevailing securities regulations.

SINGAPORE, Jan. 10, 2024 /PRNewswire/ -- Caravelle International Group (the "Company", Nasdaq: CACO), a trailblazing global ocean technology company, today announced that it has entered into a securities purchase agreement with two institutional investors (the "Investors") on January 5, 2024 to issue and sell $1.5 million of securities as an advance payment for the initial tranche of $3.3 million in a private placement of up to $6.8 million which closed on January 10, 2024. The remaining $1.8 million of the initial tranche shall be paid to the Company upon satisfaction of certain post-closing conditions as set forth in the securities purchase agreement.

The investment is in the form of a Senior Secured Convertible Promissory Note (the "Note"). The Note has an 18-month maturity. In addition, the Note will be convertible into the Company's ordinary shares at an initial conversion price equal to $1.00 per share, subject to adjustment as further specified in the Note. The Note will be repayable in cash upon maturity. Prior to maturity, the Investors can convert the Note into ordinary shares at conditions specified in the agreement. The Note contains certain prepayment options and participation rights. The private placement is subject to customary closing conditions. As part of the investment, the Investors are also granted five-year warrants equal to 50% of the funded amount at an initial exercise price equal to $1.00 per share, subject to adjustment.

After deducting the placement agent's commission and other offering expenses payable by the Company, the net proceeds to the Company were approximately $1 million. The Company intends to use the proceeds from this financing for general working capital purposes.

Maxim Group LLC acted as the sole placement agent for the private placement.

The Company has agreed to file a registration statement for the resale of the ordinary shares issuable upon the conversion of the Note and upon the exercise of the warrants. Subject to the satisfaction of certain conditions, additional tranches of funding may be provided by mutual agreement of the Investors and the Company in the aggregate amount up to $6.8 million, including the first tranche. The Investors are entitled to receive an additional warrant equal to 50% of the increased funding amount with an exercise price equal to the VWAP on the trading day immediately prior to the subsequent closing date.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or other jurisdiction.

About Caravelle International Group

Caravelle is a global ocean technology company. Its business comprises of two sectors: the traditional business in international shipping, operated by the Topsheen Companies (Topsheen Shipping Group Corporation (Samoa) and its subsidiaries) and the new CO-Tech business under Singapore Garden Technology Pte. Ltd. As the traditional business, Caravelle's international shipping business has generated all revenues. The CO-Tech business is a new development building upon the existing shipping business. It enables wood desiccation during the maritime shipping process, with full utilization of the shipping time, space, and the waste heat of exhaust gas from the shipping vessels. Caravelle's CO-Tech industry has no historical operations and has not generated revenue. Caravelle is headquartered in Singapore.

Forward Looking Statements

This announcement contains "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, including, without limitation, those with respect to the objectives, plans and strategies of the Company set forth herein and those preceded by or that include the words "believe," "expect," "anticipate," "future," "will," "intend," "plan," "estimate" or similar expressions, are "forward-looking statements". Such statements include, but are not limited to risks detailed in the Company's filings with the U.S. Securities and Exchange Commission, including its Annual Report on Form 20-F for the fiscal year ended October 31, 2022. These forward-looking statements involve a number of risks and uncertainties, which could cause the Company's future results to differ materially from those anticipated. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. All information provided in this press release is as of the date of the publication, and the Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

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SOURCE Caravelle International Group

FAQ

What is the recent announcement from Caravelle International Group (CACO)?

The company announced a securities purchase agreement with institutional investors for $1.5 million in advance payment for a private placement of up to $6.8 million.

What form does the investment take?

The investment is in the form of a Senior Secured Convertible Promissory Note with an 18-month maturity.

What is the initial conversion price for the convertible note?

The initial conversion price for the note is $1.00 per share.

What are the net proceeds to the company from this financing?

The net proceeds to the company were approximately $1 million.

What are the proceeds intended for?

The proceeds are intended for general working capital purposes.