- Gambling entertainment player Tabcorp experienced a net loss of A$870 due to COVID-19 pandemic. The Company took several steps to respond to the situation, including costs control and financial flexibility maximisation.
- Recently, TAH completed retail shortfall bookbuild portion of Entitlement Offer, and it concludes the renounceable entitlement offer announced with the FY2020 result.
- On 24 August 2020, TAH completed institutional component of its underwritten 1 for 11 pro-rata accelerated renounceable entitlement offer & raised A$371 million.
- The proceeds of the Entitlement offer would be employed for repaying the current drawn bank debt facilities plus in bolstering the balance sheet.
Tabcorp Holdings Limited (ASX:TAH), a component of ASX 300 index, is a diversified gambling entertainment company with over 5,000 employees and 9,000+ venues.
For FY2020, Tabcorp Holdings Limited reported a drop in its revenue by 4.8% and experienced a net loss of A$870 due to COVID-19. The Company took various measures to respond to the pandemic, including adopting cost control measures to preserve cash, and maximising financial flexibility. Tabcorp announced a A$600 million underwritten pro-rata accelerated renounceable entitlement offer of 1:11 @ A$3.25 per share (Entitlement Offer).
Completion of Retail Shortfall Bookbuild Portion Entitlement Offer:
Tabcorp Holdings, On 16 September 2020, announced the completion of retail shortfall bookbuild portion of its underwritten 1 for 11 pro-rata accelerated renounceable entitlement offer. Through this retail component of entitlement, the Company was able to raise a gross proceed of ~A$230 million by issuing 71 million new Tabcorp shares. Each share under the Retail Entitlement Offer was issued at A$3.25 per share.
Retail Shortfall Bookbuild Result:
Under the Retail Shortfall Bookbuild, around 39.7 million Retail Entitlements were offered for sale. The bookbuild cleared at A$3.31 per Retail Entitlement.
Issue of new Tabcorp shares:
Under the Company’s Retail Entitlement Offer as well as the Retail Shortfall Bookbuild, the settlement of new Tabcorp shares would likely to be on 18 September 2020.
Completion of Retail Component of Entitlement Offer:
On 15 September 2020, the Company had completed the retail component of its underwritten 1 for 11 pro-rata accelerated renounceable entitlement offer to raise around A$600 million.
Under the Retail Entitlement Offer, the qualified retail investors were given several alternatives for dealing with their allotted entitlements (Retail Entitlements). It includes the ability to trade their Retail Entitlements on the ASX.
Around 8.5 million Retail Entitlements were sold on-market between 24 August 2020 and 3 September 2020. It represents ~12% of the Retail Entitlements under the Retail Entitlement Offer. In this process, a total of nearly A$2.7 million was realised by retail shareholders who sold their Retail Entitlements on market.
The Retail Entitlement Offer culminated on 10 September 2020 at 5:00 pm. There were around 35,000 retail shareholders who opted to take up their Retail Entitlements either partially or completely. It amounted to qualified retail shareholders subscribing for nearly 31.4 million new shares in the Company and raising nearly A$102 million.
Conclusion of the Institutional Portion of its Entitlement Offer:
On 24 August 2020, Tabcorp announced the conclusion of the institutional component of its underwritten 1 for 11 pro-rata accelerated renounceable entitlement offer. Through this Institutional Entitlement Offer, the Company raised around A$371 million from subscriptions for around 114 million New Shares at A$3.25 per share in TAH.
The Institutional Entitlement Offer obtained great assistance from the institutional shareholders. There was around 97% take-up of Entitlements held by qualified institutional shareholders.
A Quick Glance at Tabcorp’s Entitlement Offer and Revised Capital Management Targets:
Tabcorp Holdings Limited had announced the underwritten pro-rata accelerated renounceable entitlement offer on 19 August 2020 with retail trading rights to raise ~A$600 million in new shares. The Entitlement Offer had two components:
- Institutional Entitlement Offer
- Retail Entitlement Offer.
Usage of the Funds:
The proceeds of the Entitlement offer would be employed for repaying the current drawn bank debt facilities plus in bolstering the balance sheet. It would also provide financial flexibility and extra credit metric space for covenant and rating reasons.
Revised capital management targets:
The Company also provided revised capital management targets. It includes a reduction in target gearing range to 2.5-3.0x Gross Debt / EBITDA from 3.0-3.5x. Its target dividend payout ratio declined t0 70% to 80% of NPAT on the resumption of dividends.
David Attenborough, who is the Managing Director and CEO of Tabcorp stated that the continued uncertainty concerning the seriousness and extent of the COVID-19 forced the Company to think upon the prior capital management targets to improve its credit metrics and save more capital.
The measures taken by Tabcorp reflect its commitment to retain its investment-grade credit rating. Also, the Company stated that it is confident about the strength and resilience of its diversified portfolio of businesses. Tabcorp believes that the strength of its portfolio would help it to tackle the existing market challenges.
On 17 September 2020, Tabcorp share price ended the session at A$3.370, down 1.462% from its previous close. The Company has a market capitalisation of A$7.34 billion, with 2.15 billion shares outstanding.
TAH shares have delivered a return of 19.06% in the last six months.
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