Why Investors are Looking at ALQ, VRL, RWC, SRG on ASX?

Summary

• The Australian market is expected to witness impacts of pandemic-led restrictions, as Australia grapples to curb the second wave of COVID-19 cases.
• Recently, ALQ placed AU$ 281 million new, long duration USPP senior notes, the new USSP issuance would considerably broaden the Company’s weighted average debt maturity profile to 5.5 years period (based on drawn and undrawn).
• On 5 August 2020, VRL announced the extension of its Transaction Process Deed with BGH Capital Pty Ltd to 6 August 2020.
• Lately, RWC advised that as per the guidelines provided by the Victorian Government, its Melbourne manufacturing facilities would continue its operations, as it was included in the permitted industry category.
• In August, SRG gained new works and multiple contracts valued at around NZ$50 million and had secured two projects with Water Corporation amounting to ~ AU$30 million, in July.

The year 2020 has been a dreadful one for the Australian economy, with uncertainties around COVID-19 pandemic emerging as a major cause of concern for the nation.

With the sudden surge in the number of COVID-19 cases, the metropolitan Melbourne noted a shift to stage 4 restrictions comprising of limits on shopping and exercise, business shutdowns and scale-backs, as well as imposition of a night-time curfew on the city for the first time in its history.

Although the government is taking multiple actions to curb the spread of the virus, the economy is expected to witness impacts due to pandemic-led restrictions.

During the trading session on 6 August 2020, the benchmark index S&P/ASX200 was trading at 6024.3 points, marginally up by 0.38% (at AEST 1:46 PM).

Let us now quickly look at four ASX-listed companies that have been in the news lately and view their latest updates.

ALS Limited (ASX:ALQ)

ALQ caters to various sectors with laboratory testing, inspection, and certification solutions across the globe.

Placement of AU$281 million of long-term debt in the US Private Placement market

On 5 August 2020, ALQ announced that it has successfully placed AU$281 million equivalent of new long-term US Private Placement (USPP) senior notes. The Group found strong support from investors with the oversubscription of issuance by 3.5 times.

The issuance of new USPP would notably extend ALQ’s weighted average debt maturity profile to 5.5 years (on a drawn and undrawn basis). The new long-term fixed-rate notes, which would be funded on 25 November 2020, comprises of three 10-year tranches entitling AU$110 million, EU40 million and CAD100 million.

Furthermore, majority of the raised funds would be utilised for meeting the maturation of an ~AU$211 million USPP debt tranche, due in early December 2020. It would additionally aid capital management strategy and the long-term growth of ALQ.

Financial performance for Q1 FY21

On 29 July 2020, Raj Naran, CEO and MD, ALS Limited in the Annual General Meeting unveiled the Company’s bolstered liquidity of above AU$600 million and leverage ratio at 1.9x for the quarter ended June 2020.

Despite the fact that total revenue witnessed a decline of 9.8% in Q1 FY21 compared to the pcp, ALQ maintained Group underlying EBIT margin for the Q1 FY21, primarily, due to swift action in aligning its cost base with client demand.

On 6 August 2020, ALQ was trading at AU$8.87, up by 0.795% (at AEST 1:53 PM).

Village Roadshow Limited (ASX:VRL)

VRL runs businesses related to theme parks, film and DVD distribution, cinema exhibition and marketing solutions.

Extension of the exclusivity period with BGH to 6 August 2020.

On 5 August 2020, VRL announced the revision of the exclusivity period for its discussions with BGH Capital Pty Ltd (BGH). The Transaction Process deed has been extended to 6 August 2020.

A look at BGH’s Revised Proposal

On 18 May 2020, VRL announced that it had received a revised, non-binding proposal from BGH to acquire all shares of VRL through a scheme of arrangement at AU$2.40 per share.

After considering the proposal, VRL and BGH entered into a Transaction Process Deed under which BGH was given an opportunity to commence confirmatory due diligence, as well as discuss transaction documents over four weeks on an exclusive basis.

Did you read; Village Roadshow & BGH – How are the share prices moving with Takeover Updates?

Recommencement of Business

On 24 June 2020, VRL announced the reopening of its Gold Coast theme parks with 50% capacity, along with the reopening of Sea World and Paradise Country on 26 June 2020; Australian Outback Spectacular on 3 July 2020 and Warner Bros. Movie World and Wet’n’Wild from 15 July 2020.

Did you read; With cinema halls and resorts reopening, are EVT and VRL set for good old days?

On 6 August 2020, VRL was trading flat at AU$2.130 (at AEST 2:02 PM).

Reliance Worldwide Corporation Limited (ASX:RWC)

Reliance Worldwide Corporation Limited is engaged globally in the transformation of the performance and efficiency for heating and plumbing, specialist industries and smart homes.

On 5 August 2020, RWC had advised that based on the guidelines provided by the Victorian Government, while introducing stage 4 restrictions, its manufacturing facilities in Melbourne would continue to operate as it falls within the permitted industry category.

Notably, the Company is believed to have proper plans ready to make sure that it complies with enlarged coronavirus management controls and its primary focus would remain on the health and safety of its employees while at work.

Stay tuned for RWC’s full-year earnings update on 24 August 2020.

On 6 August 2020, RWC was trading at AU$2.7, up by 1.504% (at AEST 2:08 PM).

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SRG Global Ltd (ASX:SRG)

SRG is an engineering-led specialist mining services, asset services and construction group.

On 5 August 2020, SRG unveiled that it’s New Zealand business has resumed normal operations and secured contracts worth NZ$50 million consisting of the following- 5-year contract for providing access and industrial coating services for Methanex; 2-year contract for upkeep of wind turbines for Meridian; further contract works for building remediation services (Metlifecare), and specialist refractory services for OI Glass.

On 28 July 2020, SRG announced that it had secured two contracts worth ~AU30 million with Water Corporation.

The deal was locked with a perspective of designing and constructing two water tanks in Western Australia. The work is anticipated to begin in July 2020 with the duration of ~18 months.

Furthermore, on 23 July 2020, SRG had gained two specialist facades contracts amounting to AU$40 million. The project includes designing, supplying, as well as installing of specialist, engineered curtain wall facade across Sydney and Melbourne.

SRG is expected to release its full-year results for FY20 on 25 August 2020.

On 6 August 2020, SRG was trading at AU$0.305, up by 3.39% (at AEST 2:24 PM).