AMA Group's Successful Equity Raising Initiative - 22 July 2024
AMA (AMA) Share Update July 2024 Sunday 21st
AMA Group Announces Successful Equity Raising
AMA Group Limited (ASX:AMA) has announced the successful completion of its fully underwritten institutional placement and entitlement offer, raising significant funds to manage debt and support future growth.
Instant Summary:
- Raised approximately $32.5 million through institutional placement.
- Raised approximately $51.4 million through institutional entitlement offer.
- Retail entitlement offer expected to raise an additional $41.0 million.
- Funds will be used to repay $50 million of senior bank debt and manage future debt obligations.
- New shares issued at A$0.042, a 19.2% discount to last traded price.
Equity Raising Details
AMA Group Limited has successfully raised funds through a combination of a fully underwritten institutional placement and an accelerated institutional entitlement offer. The initiative, announced on 18 July 2024, aimed to strengthen the company's financial position by reducing debt and supporting future growth.
The institutional placement raised approximately $32.5 million, receiving strong support from both existing and new shareholders, including domestic and offshore investors. The shares were issued at an offer price of A$0.042, representing a 19.2% discount to the last traded price of A$0.052 on 17 July 2024.
Institutional Entitlement Offer
The accelerated institutional entitlement offer raised gross proceeds of approximately $51.4 million. About $39.3 million of entitlements were taken up by eligible institutional shareholders, with the remaining $12.1 million allocated through an institutional shortfall bookbuild at the same offer price of A$0.042 per share.
Key directors of AMA Group, including Brian Austin and Raymond Smith-Roberts, participated in the entitlement offer, reflecting their confidence in the company's future prospects.
Retail Entitlement Offer
The retail component of the entitlement offer is expected to raise an additional $41.0 million. Eligible retail shareholders in Australia and New Zealand can participate at the same offer price and ratio as the institutional entitlement offer. The retail offer will open on 25 July 2024 and close on 6 August 2024.
Retail shareholders can choose to take up all, part, or none of their entitlements, but these cannot be traded or transferred on the ASX. Any shares not taken up will be sold through a bookbuild process to institutional investors.
Use of Funds
The funds raised will be used to repay $50 million of existing senior bank debt, with an additional $50 million held in a locked account to settle expected redemptions on the convertible note put option in March 2025. The remaining proceeds will be used for future debt amortisation payments, repayment of accrued PIK interest on senior debt, transaction costs, working capital, and growth requirements.
Impact on Convertible Notes
The equity raising has triggered anti-dilution protections under AMA Group's convertible notes, reducing the conversion price from $0.3887 to $0.3484. This adjustment, effective from 26 July 2024, was determined by the independent adviser, Conv-Ex.
The successful equity raising is a positive step for AMA Group, as it strengthens the company's financial position by reducing debt and providing funds for future growth. The discounted share price may initially impact the stock price, but the long-term benefits of a stronger balance sheet and reduced debt obligations could improve investor confidence.
Investor Reaction:
Analysts have generally reacted positively to the equity raising, noting that it addresses key financial concerns and positions the company for future growth. Some investors have expressed concerns about the dilution effect of the new shares, but overall sentiment remains optimistic.
Conclusion:
Investors should monitor AMA Group's progress in utilizing the raised funds to manage debt and support growth initiatives. The company's strategic response to the equity raising will be crucial in maintaining investor confidence and driving long-term value.