Financial sector company, Credit Corp Group Limited (ASX: CCP) today announced the non-underwritten Share Purchase Plan (SPP) to raise up to $10 million following the successful raising of A$125 million via a placement offer.
The company has announced that the eligible shareholders may purchase a maximum of A$15,000 worth of new shares in Credit Corp without paying for any transaction or brokerage charges. The issue price has been set to the lower of $20.45 per new share or the price at 2.5% discount to the volume weighted average price of ordinary shares in Credit Corp traded on the ASX over the 5 trading days up to, and including, the day on which the SPP closes, i.e. 3 May 2019.
It has been clearly stated by the company that the applications may be scaled back at the absolute discretion of Credit Corp as well as the company may also determine to raise a higher amount.
The Share Purchase Plan follows the Institutional Placement that added $125 million capital raised from the professional and institutional investors. Under this placement 6,112,470 new shares were issued at the offer price of A$20.45 per share, that is within the Credit Corp’s existing placement capacity.
Credit Corp Group stated that this additional equity raising amount results in gearing initially reducing to approximately 17%, but the ROE is expected to remain above the 16-18% target range as disclosed in the investor presentation.
The proceeds from both, the Placement and Share Purchase Plan, will reportedly be utilised to enhance the strategic position of Credit Corp, accelerate the execution of its strategic initiatives and provide it with additional balance sheet flexibility.
As per the company’s information, it is not mandatory for the shareholders to subscribe for Share Purchase Plan and the SPP Booklet and personalised application form has already been sent to its eligible shareholders. The offer has been scheduled to close on 3 May 2019.
The New Shares will rank pari passu with Credit Corp’s existing fully paid ordinary shares as at their date of issue.
During the first half of Fiscal 2019, the company reported 13% increase in Net Profit After Tax (NPAT) to $33.6 million underpinned by 71% growth in US revenue and strong consumer lending with 20% growth in new customer volume.
In 1HFY19 results, Credit Corp upgraded in 2019 earnings guidance to represent profit growth in the range of 7-9 percent. The updated 2019 guidance is as follows:
The higher acquisition of Purchased Debt Ledgers (PDL) and the increase in company’s bottom line are pictured as a consequence of increased US investment and unexpectedly strong consumer lending book growth during the half year ended 31 December 2018.
In today’s trading session, CCP stock price edged up by 0.522% to last trade at $23.100 on 10 April 2019. The stock closed at a price to earnings multiple of 16.130 x with a market capitalisation of $1.25 billion.
Over the past 12 months, the stock has witnessed a positive performance change of 21.39% including an upsurge of 19.07% in the past three months.
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