NTAW Holdings Announces Capital Raising and Financial Outlook
NTD (NTD) Share Update September 2024 Tuesday 17th
NTAW Holdings Announces $12.41 Million Capital Raising
NTAW Holdings Limited (ASX: NTD), a major tyre and wheel importer in Australia and New Zealand, has announced a significant capital raising initiative aimed at bolstering its working capital and supporting its recent acquisition of Dunlop tyre distribution rights.
Instant Summary:
- NTAW Holdings is raising $12.41 million through an underwritten non-renounceable entitlement offer.
- The offer is on a one (1) for four (4) basis at $0.37 per share, resulting in the issue of 33,534,024 new shares.
- Funds will be used for working capital to distribute Dunlop tyres and cover offer costs.
- The company has increased its trade finance facility from $73 million to $93 million.
Capital Raising Details
NTAW Holdings Limited has announced a $12.41 million capital raising through an underwritten, non-renounceable entitlement offer. This offer is available to existing shareholders on a one (1) for four (4) basis at $0.37 per share, resulting in the issuance of 33,534,024 new shares. The record date for the entitlement offer is 23 September 2024.
The funds raised will be used primarily for working capital required to distribute Dunlop tyres and to meet the costs associated with the offer. Additionally, NTAW has arranged an increase in its trade finance facility from $73 million to $93 million, which will be drawn as needed to fund temporary movements in working capital associated with the Dunlop business. This facility expires on 30 September 2027, with the next annual review set for October 2025.
Financial Performance and Outlook
In FY24, NTAW Holdings generated revenue of $533 million, supported by long-standing supplier relationships and a focus on building core brands. The group employs around 850 people and serves over 3,500 B2B customers across Australia and New Zealand.
Despite a decrease in revenue from FY23 due to a reduction in the number of brands sold, the company reported an increase in gross profit and margin, attributed to changes in product mix, lower supplier prices, and reduced inbound freight costs. Operating EBITDA for FY24 was $42.3 million, up from $38.8 million in FY23.
Strategic Initiatives and Risks
NTAW Holdings has been actively consolidating its position in the tyre wholesale sector. In September 2023, the company entered into agreements to distribute Dunlop tyres in New Zealand and Australia. The distribution of Dunlop tyres commenced in New Zealand in November 2023 and in Australia in April 2024. The company has also been rationalizing its brand portfolio and consolidating its warehouse operations to improve efficiency.
However, the company faces several risks, including macroeconomic conditions, supplier risks, foreign exchange fluctuations, and competition. NTAW Holdings is also focused on managing integration risks associated with recent acquisitions and ensuring the retention of key personnel.
The capital raising initiative is expected to provide NTAW Holdings with the necessary funds to support its working capital needs and cover the costs associated with the offer. The increase in the trade finance facility will also help manage temporary movements in working capital related to the Dunlop business. These financial moves are likely to strengthen the company's balance sheet and support its growth strategy.
Investor Reaction:
Analysts are likely to view the capital raising positively as it demonstrates NTAW Holdings' proactive approach to managing its financial needs and supporting its growth initiatives. The increase in the trade finance facility is also expected to be seen as a prudent measure to ensure liquidity and operational stability.
Conclusion:
Investors should monitor NTAW Holdings' progress in integrating the Dunlop distribution business and its efforts to improve operational efficiency. The capital raising and increased trade finance facility are positive steps towards supporting the company's growth strategy. Investors are encouraged to stay informed about NTAW Holdings' financial performance and strategic initiatives.