Special Report: ASX-listed micro Reffind is looking to recapitalise Loyyal amid global travel restrictions and a changing macroeconomic climate. 

The transformational impact of COVID-19 has seen it extend across multiple high growth industries across the world, from the embrace of new technologies and modes of remote working, the shift towards a services-focused delivery of traditional financial services on mobile channels, or forcing global airlines to a complete halt.

Adjusting to this new set of macroeconomic challenges requires an understanding of existing business fault lines, enforcing a post-COVID recovery plan and pivoting the company to ensure it can maximise value for shareholders in a time of increased uncertainty. 

Stepping up to the plate is Reffind (ASX:RFN), an Australian listed technology firm, who is seeking to recapitalise their strategic investment in Loyyal, the blockchain-enabled loyalty & rewards platform headquartered in San Francisco.

During March, the Company made a strategic decision to seek repayment of its 2 year convertible promissory notes – worth a total of USD$800,000 – rather than converting this to equity, as a risk mitigation procedure to safeguard Reffind’s investors from the flow-on impacts that COVID-19 has had both on Loyyal and its immediate customers. 

“Loyyal’s value has skyrocketed in the two years since we first invested USD$2.3million in them in 2018 and since their successful pilot with Emirates Airways in October last year,” Reffind non executive chairman Rumi Guzder told Stockhead. 

“The unique circumstances with COVID-19 have meant that Loyyal’s clients such as Emirates have been significantly impacted. This has put Loyyal in a difficult financial position in negotiations with Reffind to repay the Note at this time.” 

When Reffind first invested in Loyyal in January 2018, Reffind received a 9.38% equity stake in the business and Loyyal was valued at USD$16 million. Conversion of the promissory notes would see a further equity interest of 5.33% (at a USD$15 million valuation).

With Loyyal now valued at USD$29 million following its most recent capital raise in January, Reffind is now seeking to increase its stake significantly beyond its current holding in a decisive move that is expected to drive value for Reffind shareholders over the long term.

“The current market conditions provide us with an opportune moment to increase our investment significantly in a company that has huge investment potential and application across a growing number of industries and verticals that will deliver real rewards when the economic conditions begin to settle in a post-COVID-19 recovery,” Guzder told Stockhead.

“This is a key part of our proposed strategy to monetise the Loyyal investment and maximise shareholder value by delivering material uplift.” 

According to Guzder, Reffind recognises that the major market opportunities for Loyyal span across airlines, hotels, and financial services – three sectors where this a “proven unmet demand” for loyalty rewards schemes. 

Guzder said an upcoming listing by Loyyal could help ensure it provides a “substantial value add for investors” in the long term as it steers beyond a climate of macroeconomic uncertainty.

He confirmed Reffind was working in conjunction with a consortium of investors to recapitalise Loyyal and take up to a 100% controlling stake in the blockchain-based company, placing Reffind in a strong position to provide “strong benefit to our shareholders” in a post-COVID-19 environment.  

“Reffind, in conjunction with the consortium, presently intends to bid for the assets of Loyyal. If successful, [we would] continue to operate the business, await trading conditions to improve and, at the appropriate time, put Loyyal on a path to IPO.”

“Reffind may need to conduct a further capital raising and will…advise the market accordingly.”

Reffind shares were up 50% on Tuesday, trading at $0.003.

This article was developed in collaboration with Reffind, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.