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Highlights
- Simonds requests to raise AU$25.5 million on a 13 for 9 pro rata entitlement offer.
- The company expects to support its balance sheet using the raised working capital.
- Simonds’ largest shareholder has agreed to fully underwrite the offer.
Australian home builder Simonds Group Limited (ASX:SIO) today (On 25 November 2022) announced to launch a customary 13 for 9 pro rata renounceable entitlement offer to raise about AU$25.5 million in equity. As per the ASX filing, this traditional entitlement offer is an endeavour to strengthen the company's balance sheet as well as the working capital needs.
Simonds had advised of the challenging market conditions through an ASX filing on 7 November 2022. Since that time, the Simonds board has looked into a number of capital solution options to support the business's balance sheet while preparing it to survive a "more prolonged adverse trading period," as stated by Simonds.
In light of Simonds' current working capital needs, the company has decided that an equity raising of $25.5 million in combination with negotiating new conditions for its secured credit arrangements is the best course of action.
The company also advised that if things turn out to be better earlier than expected and the situation becomes clearer, Simonds may think about allocating working capital to accelerate its upcoming projects.
Details of Simonds’ entitlement offer
An official ASX announcement shared on 25 November states that Simonds has asked shareholders to engage in a 13 to 9 pro rata renounceable entitlement offer of new fully paid ordinary shares in Simonds at an offer price of AU$0.12 per new share for raising AU$25.5 million in equity.
Shareholders eligible to participate in this entitlement offer should be residents of Australia or New Zealand. They will be able to purchase 13 new shares at an offer price of AU$0.12 per new share in exchange for every 9 existing fully paid ordinary Simonds shares they own as of 7 PM on 30 November 2022.
The offer price of AU$0.12 per new share is 14.2% less than the theoretical ex-rights price (TERP) of AU$0.140 per share, 28.8% less than the 30-day volume weighted average (VWAP) of AU$0.168, and 4% less than the Simonds shares' most recent closing price on 24 November 2022, which was AU$0.125 per share.
Talking about the entitlement offer, Rhett Simonds, CEO and executive chairman of Simonds, said:
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Data Source: Company announcement dated 25 November 2022
While Simonds’ largest shareholder Vallence Gary Simonds, who holds 47.5% voting power, has agreed to take up his entire entitlement, the other two primary shareholders, McDonald Jones Homes Pty Ltd and F.J.P. Pty Ltd were also contacted before the commencement of the rights issue; however, neither of them was willing to utilise their entire entitlement.
