Bubs asks shareholders for more capital to fund US push

afr.com:

Infant formula player Bubs Australia is trying to raise $28 million to fund its US market expansion to help meet growing demand for its products from retail shelves and Amazon.

Bubs is being advised by Melbourne-based Kidder Williams. Broker Bell Potter launched the raising on Wednesday, consisting of a $14 million placement and $14 million share purchase plan. The 12.5¢ a share offer price is a 24.2 per cent discount to its last traded price, according to a term sheet seen by Street Talk.

Bubs is moving to add a second production shift at its Deloraine factory in Victoria to meet the increased demand, requiring more working capital.

New CEO of Bubs Australia Reg Weine and Bubs chairwoman Katrina Rathie are making a major push into the US market. 

The company progressed its US Food and Drug Administration application over the first quarter. The next step is the submission of the clinical data, which is due by next September. The deadline for submission for permanent market access is October 2024.

Bubs has remained committed to meeting all these deadlines, calling the US market its “number one strategic priority” since it reset its China strategy. These are the two largest baby formula markets in the world.

The US now represents 40 per cent of Bubs’ sales, where it is focused on the goat milk formula market. Bubs got a foothold in the US after being one of the first companies to get the nod from the US government during its formula shortage triggered by a contamination scare. Import rules were relaxed given the crisis.

Bubs, along with a2 Milk, is now seeking permanent US access.

In October, the ASX minnow whose board survived an attempted roll earlier this year, said it was incurring significant costs associated with the