Balcatta-based engineering company Orbital Corporation Ltd has raised $4 million through a share placement to fund a proposed expansion, ahead of issuing a share purchase plan to raise an additional $2 million.
Balcatta-based engineering company Orbital Corporation Ltd has raised $4 million through a share placement to fund a proposed expansion, ahead of issuing a share purchase plan to raise an additional $2 million.
The full text of a company announcement is pasted below
Orbital Corporation Ltd advises that it has successfully raised $4 million through a placement of approximately 26.6 million shares at an issue price of 15c per share. The Company will also make an offer under a Share Purchase Plan so that all its shareholders resident in Australia and New Zealand are entitled to purchase up to $5,000 worth of ordinary shares in the Company at the 15c per share placement price. If fully subscribed, the SPP will raise a further $2 million.
Shareholder approval is not required to complete this capital raising and will not be sought by the Company.
Patersons Securities Ltd acted as Lead Manager to the share placement which was well supported by existing shareholders and new investors. Patersons Securities Ltd has also fully underwritten the SPP.
The purpose of the capital raising is to support the growth of the business. As discussed at the Company's recent AGM, Orbital commenced the financial year with a healthy order book for engineering services, with additional orders since June continuing to be robust. In line with the Company's last shareholder communications in October, we have seen a strong increase in engineering services revenue in the first quarter and we anticipate this will continue for the second quarter providing confidence for an improved full year result from this business segment. Also, in September 2006, Orbital agreed to pay $500,000 to settle in full a legal dispute with Coles Myer. These conditions have increased the working capital requirements beyond our earlier estimates.
In addition, Orbital anticipates opportunities to expand the size and scope of the business including for example larger scale engineering programs and strategic alliances. Following the capital raising, the Company will have a more appropriate level of working capital and will be able to better pursue these opportunities and ensure we can be more proactive in pursuing growth.
Orbital is pleased to provide shareholders an opportunity to participate in the capital raising through the SPP. The SPP will enable all Orbital shareholders resident in Australia and New Zealand to purchase up to $5,000 worth of ordinary shares in Orbital (ranking equally with existing fully paid ordinary shares) at the placement price of 15c per share, without incurring brokerage or other transaction costs. In the event of shareholder demand in excess of the pool of stock available for the SPP (currently being approximately 13.3 million shares), Orbital may elect to accept additional SPP applications.
Eligible shareholders who are registered as at 5:00pm (Perth time) on 21 November 2006 will be entitled to participate in the SPP. A letter which sets out the offer under the SPP will be sent to all eligible shareholders shortly after that date.
This release includes forward-looking statements that involve risks and uncertainties. These forward-looking statements are based upon management's expectations and beliefs concerning future events. Forward-looking statements are necessarily subject to risks,
uncertainties and other factors, many of which are outside the control of the Company, that could cause actual results to differ materially from such statements. Actual results and events may differ significantly from those projected in the forward-looking statements as a result of a number of factors including, but not limited to, those detailed from time to time in the Company's Form 20-F filings with the US Securities and Exchange Commission. Orbital makes no undertaking to subsequently update or revise the forward-looking statements made in this press release to reflect events or circumstances after the date of this release.
