SPC Global, the Australia-based food-and-drinks group, has started its rights offer, a move drawn up to help lower the company’s debt.
The canned foods, dairy and juices supplier, which listed less than 18 months ago, is looking to bolster its balance sheet.
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In a stock-exchange filing today (22 May), SPC Global said it was looking to raise A$97.1m (US$69.3m) before costs.
Under the so-called entitlement offer, shareholders will be able to acquire one new share for every 0.1993 shares they already own. The offer will close on 2 June.
In an investor presentation last week, SPC Global’s management said the majority of the proceeds would be used to repay borrowings.
“Proceeds from the equity raising will be used to strengthen SPC Global’s balance sheet, providing further financial flexibility and headroom to support the working capital requirements of SPC Global’s business strategy,” the presentation read.
“The majority of the proceeds will be used to reduce the company’s outstanding senior bank debt to a level that reflects a more appropriate leverage position.”
After the equity raising, SPC Global said its net debt, based on its position on 31 December, would stand at A$38.7m on a pro-forma basis, down from A$138.7m.
The company’s pro-forma net debt-to-equity ratio would be 21%, rather than 165.3%.
In the first half of SPC Global’s financial year, six months that ran to the end of December, the group generated net sales revenue of A$171.5m, down 13.3%. Domestic sales fell 6.6% to A$155.6m.
SPC Global posted a net loss of A$19.6m, compared to one of A$39.7m in the corresponding period a year earlier.
The group reported a “normalised EBITDA” of A$13m, a result it described as “well ahead” of the A$7.5m filed in the first six months of its previous financial year.
SPC Global said its normalised EBITDA was supported by its on-the-go products and “tighter promotional discipline in retail”.
