Automotive Holdings Group has launched an institutional share placement in order to reduce its $353 million debt and pursue growth opportunities.
Automotive Holdings Group has launched an institutional share placement in order to reduce its $353 million debt and pursue growth opportunities.
The Perth-based car dealer and transport logistics company said it also planned to offer existing shareholders the chance to participate in a share purchase plan to be announced soon.
The proceeds from the share placement will be used to maintain balance sheet flexibility through reduction of net debt, Automotive Holdings said.
Managing director Bronte Howson said that will enhance the group's ability to pursue growth opportunities.
"Following this raising, AGH's net debt will be considerably reduced, providing significant capacity under existing facilities to pursue our growth strategies," Mr Howson said in a statement.
Details of the capital raising were not announced and comment was being sought from AHG at time of publishing.
The company's earnings for the final quarter of the current financial year were expected to be in line with the second and third quarters, he added.
Third quarter net profit was $11.1 million, bringing net profit for the nine months to March 31 to $29.3 million.
Automotive Holdings runs 86 vehicle dealerships in Australia and New Zealand, distributes automotive products and operates national refrigerated transport.
Its shares remain in a trading halt at $1.30.
The announcement is below:
Automotive Holdings Group Limited (ASX: AHE) ("AHG") announces that it will undertake an institutional placement of ordinary shares ("Placement"). Proceeds from the Placement will be used to maintain balance sheet flexibility through net debt reduction which will enhance AHG's ability to pursue further growth opportunities.
Merrill Lynch and Euroz Securities will act as joint lead managers to the offer.
Managing Director, Bronte Howson, said "AHG's Board and management are continually assessing capital management opportunities in order to ensure that we maintain maximum balance sheet flexibility to fund our future growth. Following this raising, AHG's net debt will be considerably reduced, providing significant capacity under existing facilities to pursue our growth strategies."
AHG plans to offer existing shareholders the opportunity to participate in a Share Purchase Plan, details of which will be announced shortly.
Outlook
As disclosed in the 'Market Update' on 20 April 2009, Net Profit After Tax ("NPAT") for the nine months to 31 March 2009 was $29.3 million (unaudited, pre adjustments reported in December 2008). NPAT for the quarter ending 31 March 2009 was $11.1 million. AHG continues to expect a similar performance for the final quarter to the second and third quarters of the 2009 financial year in terms of earnings.
It is anticipated that the current trading halt will be lifted at the commencement of trading on 19 May, 2009, pending successful completion of the Placement.
