CGrowth Capital Inc (OTCMKTS:CGRA) issued an update stating that its subsidiary, CGrowth Capital Bond, Ltd., has been able to raise initial subscription amount of £7,300,000.00 against its £15,000,000.00 British Pounds Sterling (“GBP”) bond.
The company’s subsidiary is working towards raising the residual portion of the bond offering. The bonds issued by the company comprises of $5,700,000.00 USD gross proceeds (£4,100,000.00 GBP in cash) and a note receivable amounting £1,900,000.00 GBP. Apart from this, the bond offering also include equity worth £1,300,000.00 GBP. The finance raised through this offering will be utilised towards funding three major projects, including Powder River basin oil and gas project in Wyoming.
CGrowth’s CEO, Bill Wright, called the achievement as a milestone for the company. He added that the company’s Powder River Resources, Inc., which is also its subsidiary, is an important project for the company, which holds an estimated oil reserves of $250,000,000.00. CGrowth Capital and Powder River Resources together hold an umbrella policy of $10,000,000 for the project.
Some issues remain
Though the company’s progress in its bond offering is significant but there are handful of questions that remain unanswered. For instance, the company has so far failed to explain the reasons behind its disappointing financial position. The company’s cash reserves are minimal at $3,000 while its current assets worth $183,000 are buried under the liabilities of $1.9 million. Moreover, the company failed to justify an 87% fall in its quarterly revenue to $18,000 during the recent quarter. At the same time, the company’s quarterly loss stands tall at $118,000.
Over and above this, CGrowth has seen a substantial dilution in its common shares, resulting from convertible debt. Still, investors are hoping high from the company based on the expectations that the proceeds from bond offering will resolve the ongoing issues.
The stock of the company fell by nearly 23.48% to $0.0088 during yesterday’s trade.