23/10/2009 - 17:15

VDM Group to raise $35m

23/10/2009 - 17:15

Bookmark

Save articles for future reference.

VDM Group has announced plans to raise $35 million as part of a strategy to reduce its debt levels and strengthen its financial position.

VDM Group has announced plans to raise $35 million as part of a strategy to reduce its debt levels and strengthen its financial position.

The consulting, construction and infrastructure services company said it will carry out the capital raising through two separate placements and a rights issue.

The first raising will consist of the placement of 10 million shares at a discounted 50 cents each to raise $5 million.

Following that, VDM will undertake a fully underwritten three-for-seven rights issue, with shares priced at 42 cents each, to raise $25 million. Patersons Securities has agreed to underwrite the issue.

Post the rights issue, a placement of a further 10 million shares at 47.5c each will be made.

Both placements will be arranged by Patersons.

VDM chairman John Saleeba said proceeds from the capital raising will be used to reduce bank debt and to augment working capital for expected future growth.

"VDM Group will pay down $15 million of its bank debt, reducing gearing levels to 30 per cent," he said.

"We plan to pay down bank debt by a further $16 million by 30 June 2010, through cash flow and non-core asset sales."

At the end of the 2009 financial year, VDM had net debt of $72.9 million and a gearing ratio of 41.2 per cent.

Mr Saleeba said VDM has more than $340 million of work in hand, with some $300 million set to be completed this financial year.

"Coupled with Q1 FY2010 revenue of over $100 million, we expect full year revenue for FY2010 of around $400 million," he said.

"The improving operating environment we are seeing, combined with a restructured balance sheet, will place VDM Group in a strengthened position to return to profitability in FY 2010."

The group booked a $106 million net loss in 2008/09.

Shares in VDM, which will emerge from a trading halt on Monday, last traded at 60 cents.

 

The announcement is below:

 

Highlights

- Combined capital raising initiatives totalling $35 million

- Placement of 10 million shares at 50 cents per share to raise $5 million pre the renounceable Entitlements Offer

- Underwritten 3 for 7 renounceable Entitlements Offer of shares to shareholders at 42 cents per share to raise $25 million

- Placement of a further 10 million shares at 47.5 cents post the renounceable Entitlements Offer

- Significant balance sheet restructure - $15 million in net debt paid down, gearing reduced to 30%

- Targeted future debt repayments this financial year of $16 million from cash flow and sale of non-core assets

- Strong operating position, work in hand of $340 million, expected full year revenue of $400 million

Perth, 23 October 2009: The Board of VDM Group Ltd (ASX: VMG) is pleased to announce combined capital raising initiatives raising $35 million to be used to reduce debt levels and strengthen the Company's financial position.

The combined capital raising involves:

- a placement of 10 million shares at 50 cents each (Tranche 1) to raise $5 million;

- a fully underwritten renounceable Entitlements Offer to VDM Group shareholders on a 3 for 7 basis at an issue price at 42 cents per share (Entitlements Offer), to raise approximately
$25 million; and

- a placement of 10 million shares at 47.5 cents (Tranche 2) to raise a further $4.75 million, bringing the total raising to approximately $35 million.

Shares issued in the Tranche 1 placement are eligible to participate in the Entitlements Offer.

The Tranche 2 placement is subject to shareholder approval and therefore will not be eligible to
participate in the Entitlements Offer which is the reason why the issue price is lower than the shares to be issued in the Tranche 1 placement. A meeting of shareholders to approve the Tranche 2 placement and ratify the Tranche 1 placement will be held in early December 2009.

A timetable for the Entitlements Offer is included in Appendix 1. The placements have been arranged by Patersons Securities Limited and the Entitlements Offer will also be underwritten by
Patersons Securities Limited.

VDM Group Chairman, Mr John Saleeba, said that the proceeds from the capital raising will be used to reduce bank debt and to augment working capital for expected future growth.

"VDM Group will pay down $15 million of its bank debt, reducing gearing levels to 30 per cent," said Mr Saleeba.

"We plan to pay down bank debt by a further $16 million by 30 June 2010, through cash flow and
non-core asset sales," he said.

"In line with our strategy for 2010, the Board has undertaken this prudent proactive step to strengthen VDM Group's balance sheet and better position the Company to capitalise on the emerging upswing in the resources and oil and gas sectors, particularly in Western Australia.

"VDM Group has more than $340 million of work in hand, with some $300 million set to be completed this financial year. Coupled with Q1 FY2010 revenue of over $100 million, we expect full year revenue for FY2010 of around $400 million.

"The improving operating environment we are seeing, combined with a restructured balance sheet, will place VDM Group in a strengthened position to return to profitability in FY2010. I am pleased to therefore invite shareholders to participate in the Entitlements Offer," he said.

The Entitlements Offer prospectus has been lodged with ASIC and the ASX today.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options