Under the terms of the private placement, 1,500,000 common shares were issued at $3/share. The Canadian company, whose flagship product is Neptune Krill Oil (NKO), said the placement followed unsolicited interest from the investment community. It sends a clear signal of trust in the company's potential for the ingredients sector.
Neptune is looking to develop patented commercialization rights for the use of NKO in certain product categories. The company said the financing will strengthen its negotiating stance with multinational food and pharmaceutical companies for its ingredient.
Up until now, Neptune has maintained close control of distribution of NKO, but says the new business model will free up internal resources to concentrate on the development of marine-derived ingredients.
Neptune hopes alliances will be finalized by the middle of next calendar year, with the introduction of a new pipeline by the end of 2007.
Neptune also said part of the investment would be devoted to its patented extraction platform and technology, for the processing of other marine biomasses it has identified and analyzed.
The company has indicated its intentions for NKO involve further validation of its anti-inflammatory and cognitive benefits as well as strengthening the company's intellectual property.
The investment was arranged through Calgary-based agent JF Mackie & Company, to which Neptune has agreed to pay an amount equal to six per cent of the aggregate gross proceeds plus broker warrants equal to six per cent of common shares sold on completion.
In its full year 2005 results published in October, Neptune reported a 45 per cent increase in sales to C$7.29m and a 50 percent reduction in operating losses to -$0.89m (from -$1.77m) compared to the previous twelve months.