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SomnoMed Raising Up To $7.05M

SomnoMed (ASX:SOM) is raising up to $7.05 million to double capacity at its plant and fund working capital for increased revenues in existing markets.

The first component is a placement of 3.7 million new shares priced at $1.5 each to sophisticated and professional investors to raise $5.55 million.

Signficantly, chairman Dr. Peter Neustadt and other directors of the company will be subscribing for $405,000 worth of shares.

It will also raise up to $1.5 million through a share purchase plan of up to a maximum of 1 million shares to existing shareholders.

SomnoMed had reported record sales of its sleep apnea products in the North America, Europe and APAC/Japan regions during the 2013/14 financial year.

Sales in the fourth quarter reached 11,973 units, the highest unit sales in the company's history, while sales for the year came in above guidance at 43,438, which was 21% above the previous year.

It also expects further acceleration of its growth during the 2014/15 financial year. Sales volumes are expected to grow in 2014/15 by 26.5% to more than 55,000 units.

Use of Proceeds

Net proceeds from the capital raising will strengthen the company's financial position and enable it to:

- Invest in doubling capacity of the plant and introducing digital processes in the plant and its hubs in Sydney, Tokyo, Seoul, Stockholm, Helsinki, Oslo, Ede (Holland), Thuengersheim (Germany), Angers (France), Madrid, Sheffield (United Kingdom), Thiene (Italy), Frisco Texas (NYSE:USA) in 2014/15; and
- Fund working capital for increased revenues in existing markets, as well as fund working capital and operational activities in new markets.


With rising sales of its sleep apnea products, the capital raising of up to $7.05 million would enable SomnoMed to keep up its production capacity to meet projected demand.

Its oral appliance therapy for obstructive sleep apnea offers improvements over existing devices and a greater level of patient comfort which is one of the key aspects of treatment of sleep apnea.

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