Invocare To Raise A$85 Million Through Institutional Placement And SPP

Invocare Limited

Invocare Limited (ASX: IVC), a provider of funerals, burials and cremations, has announced that it is undertaking a fully underwritten institutional placement to raise approximately A$65 million. There will be another follow-on Share Purchase Plan (SPP) which will be capped at A$20 million.

Based on the positive reaction to the results of FY2018 and especially the early results of the Protect & Grow update, the company had planned to accelerate its capital raising plans via institutional placement as well as a follow-on SPP. As a result, following this announcement, the closing date for the shareholders to provide/amend DRP elections has now been extended to Friday, 15 March 2019, which was scheduled on Wednesday 6 March 2019 and that the DRP w.r.t FY18 final dividend will not be underwritten. 

The purpose of raising these funds is to provide incremental balance sheet flexibility. As stated in the earlier announcement of IVC, the company continues to focus on its strategic growth objectives.

Under the Protect & Grow program, around 35% of the sites got completed by 31 December 2018, which has been underway for 15 months. There were approximately 49 locations which are in operation for more than six months. Amongst these 49 locations, 61% of the locations are in line with the expectations for the improvement of EBITDA. During the period, when the work was undertaken, the key lessons from work will be applied during the remaining part of phase one during 2019. The phase two of the program is expected to commence in the fourth quarter of FY2019. The company also highlighted that by 2020, the maximum renovation program is going to be completed.

The funds will also be used in the regional acquisition strategy. During 2018, the company used around A$73 million capital in 11 transactions across two metropolitan locations as well as five core regional areas. Also, these acquisitions are performing beyond the expectations of the management. Based on this, InvoCare has planned that they will be pursuing regional acquisitions opportunistically.

Underwritten Institutional Placement:

While raising the capital through Institutional Placement, the offerings will be made to certain professional and sophisticated institutional investors in specifically designated jurisdictions. The Institutional Placement Price will be as per the variable price bookbuild, with $13.30 per share as its underwritten floor price. The value of the floor price represents the discount of 7.3% on the closing price of its shares on 7 March 2019, which was A$14.34. The new shares that will be issued under the Institutional Placement and through the SPP will have an equal rank to that of the shares on issue. Here, Macquarie Capital (Australia) Limited will be acting as a sole lead manager bookrunner and underwriter to the Institutional Placement.

Non-Underwritten Share Purchase Plan:

While raising the capital through the non-underwritten share purchase plan, the offering will be made to all the existing eligible shareholders to participate in the share purchase plan. The total capped amount to be raised under the share purchase plan is A$20 million with A$15,000 cap per shareholder and is not underwritten. The company highlighted that it holds right to either crease the size of the SPP or it can also scale back the application under SPP at its discretion. The SPP allows the ordinary shareholder (registered ordinary shareholders residing in AU or NZ as on 7 March 2019) to subscribe to additional shares in InvoCare.

Also, the company announced the dividend of A$0.195 on 8 March 2019.

In the last six months, the stock has generated a return of 13.36%.  The share traded last on 7 March 2019, where the closing price of the shares of IVC was A$14.340. The company has a market capitalization of A$1.58 billion and approximately 110.26 million outstanding shares.


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