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With no certainty to the limit with which the coronavirus is spreading across the globe, statistics of confirmed cases, deaths and infected people in various countries have been climbing with each passing day. In order to combat the crisis induced by COVID-19 outbreak, measures have been taken at various levels of Governments, businesses and citizens in the form of stimulus packages, wage subsidy package, social distancing, lockdowns, trading solely allowed for essential items to name a few.
At the business level, companies are taking respective measures according to their current financial position, on-going projects, covenant status, liquidity standpoint and other vital factors. Certain companies are raising capital to reinforce their balance sheet. Moreover, during this difficult time, businesses are funding their operations via. issuing notes, raising capital, seeking assistance from lender group, institutional entitlement offer, SPP and such.
Let us take a walk through six stocks that have recently announced different ways to fund their businesses and are preparing themselves to handle the market uncertainties.
Transurban Group (ASX: TCL)
Toll road operator, Transurban Group operates and builds toll roads in Australia, United States and Canada. The Company’s work towards letting people reach their destination in a swift and secure way.
TCL recently provided an update on financial close on Hills M2 debt raise, capital raising and announced senior secured notes as significant steps for balancing the Company’s financial growth.
An update on Fitch Ratings and debt raise:
On 3 April 2020, TCL notified the market that subsequent to its previous update on 25 March this year, the Company confirmed that the Hills M2 Motorway has arrived to the financial close on its raising of $815 million of non-recourse debt funded in the Asian loan market. Also, Hills is fully owned by TCL.
Moreover, Fitch Ratings notified that it reaffirmed the ‘A’- ratings for Transurban Finance Company Pty Limited and AMT Management Limited.
Senior Secured Notes:
Transurban mentioned that it has enough liquidity to meet its capital requirements and debt refinancing obligations until the end of FY 2021. To further strengthen its liquidity position, on 2 April 2020 the Company made the following announcement.
Transurban Finance Company Pty Limited is the financing vehicle of TCL which had priced EUR 600 million of senior secured 10-year notes under its Euro Medium Term Note Programme.
Subject to customary closing conditions, the Notes were priced on 1 April 2020 and the settlement is likely to happen on 8 April 2020 (as per London time). The Notes will get mature in April 2030 and will rank equally with the Company’s existing senior secured debt facilities.
At a fixed interest rate, all the proceeds would be swapped into Australian dollars. Importantly, these proceeds would be utilised to fund its development pipeline, pay off the upcoming debt maturities and for other general corporate purposes.
Capital Raising:
On 25 March 2020, TCL announced that Hills M2 Motorway (fully owned by Transurban) had achieved contractual close to raising $815 million of non-recourse debt. This process has happened through two new bank debt facilities, which were financed in the Asian loan market. Financial close is likely to happen in the coming weeks and would be subject to customary closing conditions.
The raised funds would refinance current bank facilities that are due to be matured in December 2020 and November 2022 respectively, while replacing them with a 10-year and a 15-year facility. Other than these, Hills M2 has no more secured debt.
As a positive outcome of this issuance, TCL would get boost in its weighted average maturity which was 8.4 years in December 2019.
On 3 April 2020, TCL last traded at $11.070, moving down by 6.582% from its last close.
Speedcast International Limited (ASX: SDA)
Remote communications and IT services provider, Speedcast International Limited offers critical communications solutions via. an interconnecting global terrestrial network and is receiving the support from more than 40 countries and via Company’s multi-band, multi-access technology and multi-orbit network of more than 80 satellites.
To finalise the terms of interim funding:
On 2 April 2020, SDA announced that it had signed a Forbearance Agreement under the Syndicated Facility Agreement (SFA) with its lender group. This Agreement is signed in relation to a potential covenant breach for the duration up to 31 December 2019 and some obligations which were due on 31 March 2020. The Forbearance Agreement is slated to terminate by 17 April 2020.
Rationale to enter into this agreement are mentioned below:
- The Company mentioned that it became apparent while finalising FY 2019 results that SDA would not be able to fulfil the net leverage covenant under its SFA (with that covenant calculation due to be provided to the lenders by the end of April).
- Considering the current equity market conditions and impact of coronavirus on businesses, the option for a meaningful equity raising is precluded.
Under this agreement, lenders would provide short-term forbearance of actions as a result of the breach. Also, other breaches involving the amortisation and non-payment of interest as of 31 March 2020.
The Forbearance Agreement intends to support SDA’s liquidity position and give stability. Moreover, this agreement allows the ongoing trading of the Company while it is in discussion with its lender group to execute the terms of the interim funding package.
On 10 February 2020, SDA asked for extension of suspension period from official quotation in its ordinary shares. SDA last traded on 31 January 2020 at a price of $0.790.
Webjet Limited (ASX: WEB)
A digital travel business, Webjet Limited covers both wholesale markets (through B2B) as well as global consumer markets (through B2C).
Webjet Concludes Institutional Offer:
On 2 April 2020, WEB notified on the conclusion of $115 mn institutional placement and the institutional part of its 1 for 1 enhanced pro-rata (non-renounceable entitlement offer).
Also, from the subscriptions for new fully paid ordinary securities, the institutional offer raised the amount of around $231 mn at an offer price of $1.70/ Share.
On 1 April 2020, expected $101 million were announced to the market. The Company mentioned that together with the entitlement offer and institutional placement, the gross proceeds of nearly $346 million is likely to be raised.
The three joint lead managers involved in the process were - Credit Suisse, Goldman Sachs and Ord Minnett.
The Retail entitlement offer would begin on 8 April this year and close down on 21 April this year.
Bain Capital had been allocated and consented to contribute for the amount of $25 million of WEB shares or 14.7 million New Shares in the Placement.
WEB last traded on 3 April 2020, at $2.710, slipping by 2.518 percent from its last close.
IDP Education Limited (ASX: IEL)
An educational services provider, IDP Education Limited assists in fulfilling the students’ dream of studying abroad. The Company’s services include course advice, visa application assistance, prepare for departure and free study abroad counselling.
Institutional Placement Completed with Proposed SSP for Retail Shareholders:
On 2 April 2020, IEL notified the market that it had completed $225 million of fully underwritten institutional placement. New fully paid ordinary shares issued to the institutional investors were nearly 21.1 million at an offer price of $10.65 per New Share.
The Company mentioned that it had raised equity capital to safeguard IEL from the prevailing macro-economic uncertainty due to COVID-19 pandemic. By materially increasing its liquidity, IDP intends to improve the strength of balance sheet and allows financial flexibility.
The current size of the placement was increased from its earlier announcement of $175 million owing to a substantial demand obtained from global and domestic investors.
New Shares under the Placement are likely to get settle on 6 April 2020 and their issuance and trading commencement on ASX on 7 April 2020.
Under the Share Purchase Plan, the issue price of New Shares would be the lower of below mentioned two options.
- 2 percent discount to the 5-day VWAP of IEL shares and up to / including the SPP’s closing date
- Offer Price
On 3 April 2020, IEL last traded at $13.810, declining by 6.373 percent from its last close.
NEXTDC Limited (ASX: NXT)
An information technology Company, NEXTDC Limited is ASX-listed Data Centre-as-a-Service provider having nine facilities across five cities in Australia.
Equity Raising:
As announced on 2 April 2020, NXT is undertaking a capital raising, including $672 million of fully underwritten institutional placement of new shares and a non-underwritten Share Purchase Plan.
The Placement Price is of $7.80 per share, which indicates a 15 percent discount to the last close and 9.4 percent discount to 5-day VWAP.
The proceeds from the raised capital of nearly $672 million would be used to fund the following.
- $350 million in the development of a new data centre in Sydney (S3).
- $307 million in growth driven initiatives which includes development opportunities and capacity requirements.
- Transaction costs of $15 million.
The Company offered eligible shareholders in New Zealand and Australia the ability to subscribe for a maximum of $30,000 of new shares. Each new share was under a non-underwritten and uncapped SPP.
SPP is not mandatory and opened for eligible shareholders (Having registered address in New Zealand and Australia and holder of NXT’s share on 1 April 2020). SPP is scheduled to start on 14 April this year and close down on 30 April this year.
The underwriters of the placement are the bookrunners and Joint Lead Managers, including Citigroup Global Markets Australia Pty Limited and Royal Bank of Canada.
Along with the equity raising plan, NEXTDC re-affirms its earnings guidance for FY 2020 which was announced on 19 March 2020.
On 3 April 2020, NXT last traded at $9.2, rising up by 0.218 percent from tis last close.
Kathmandu Holdings Limited (ASX: KMD)
An ASX-listed entity, Kathmandu Holdings Limited is an action and outdoor sports Company. KMD consists of three iconic brands, namely, Oboz, Rip Curl and Kathmandu.
KMD updated the market that it had completed the NZD 30 million placement and institutional entitlement offer component of its fully underwritten 1.2 for 1 pro-rata accelerated entitlement offer. Under the Placement and Entitlement Offer, a total of nearly NZD 207 million will be raised.
The New Shares offered as per (Placement and Institutional Entitlement Offer) is likely to be allocated and start its trading on ASX and NZX on 9 April 2020. Also, these new shares would rank equally with existing fully paid-ordinary shares.
The retail component of the Entitlement Offer would start on 6 April this year and end on 17 April this year. Eligible Retail Shareholders may opt to take up their entitlements either partly, completely, or not at all.
On 3 April 2020, KMD last traded at $0.760, dipping by 22.449 percent compared to its last close.
