13/08/2013 - 11:24

Diploma seeking $9.1m to reduce debts

13/08/2013 - 11:24

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Diploma seeking $9.1m to reduce debts
Diploma chief Nick Di Latte says the company's strategic review is paying dividends.

Development and construction firm Diploma Group has gone to the market with a discounted placement and rights issue, to raise $9.1 million to pay down debts and increase working capital.

Diploma announced today it had completed a $687,000 placement, priced at 3 cents per share, while also launching an 8-for-5 renounceable rights issue for existing shareholders, also priced at 3 cents per share.

The company is seeking to raise up to $8.4 million through the rights issue, which is proposed to be fully underwritten by Patersons Securities.

The issue is at a 42 per cent discount to Diploma’s last closing share price of 5.2 cents on August 8.

Diploma said the funding would allow it to reduce its debt balance from $18.1 million at June 30, to $7.2 million.

“Of the $7.2 million pro-forma debt remaining after the capital raising, $6.3 million is project finance and $0.9 million is general working capital,” Diploma said in a statement.

“This level of debt is sustainable given the company’s current projects and order book and is anticipated the $6.3 million of project finance will be refinanced into construction facilities in the short term.”

Updating the company’s current activities, Diploma said its order book stood at $220 million for the next 18 months, with an additional $315 million either tendered for or under negotiation.

Managing director Nick Di Latte said the company’s review of operations, launched in August last year after a 2012 financial year pre-tax loss of $21.5 million, had facilitated a turnaround in Diploma’s fortunes.

Diploma told the market earlier this month that FY2013 net profit came in at $1.6 million, on the back of revenue of $163 million.

“On completion of the placement and entitlement issue, we will be in a strong position to build on this performance through the quality execution of existing contracts as well as through leveraging existing relationships to continue to build our order book,” Mr Di Latte said.

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