Kitchen appliance company Breville (ASX: BRG) has today raised $94 million at a 9.1 per cent discount to yesterday's closing price, only to see its shares jump by a further 9.6 per cent this morning.
In other words, anyone who took part in the institutional placement and sells right now has just made a 20.5 per cent profit in the space of 24 hours.
"We are very pleased with the demonstration of support shown by our shareholders and other institutional investors for the Placement," says Breville chief executive officer Jim Clayton.
"We see the success of the Placement as a clear endorsement of Breville's strong and resilient business and our long-term growth strategy, focusing on product development and international expansion."
The company entered a trading halt yesterday morning and announced the equity raising after the market closed, comprising the $94 million placement as well as a share purchase plan (SPP) that is intended to raise an extra $10 million.
The funds will be used to invest in working capital including inventory build-up in order to sustain Breville's recent sales trajectory and plans to enter new markets in FY21. The company entered the French and Gulf markets in recent months, following expansion into Spain and Turkey in September last year.
In addition the group has capital expenditure plans to roll out its systems across all the markets where it operates, with its platforms already live in the UK, France and Germany.
The capital raising coincided with a market update that showed constant currency revenues were up in March and April at rates of 14 per cent and 18 per cent respectively.
Despite the good news, the company is not getting complacent and has reportedly taken "prudent and tactical action" to manage cost and cashflows due to uncertain trading conditions.
The company has also received a commitment letter from ANZ with a term sheet to refinance and extend the maturity of existing debt facilities of $373 million to up to three years.
The SPP will open on 21 May and close on 11 June, and once the equity raising is over it is expected the new shares will represent 4.7 per cent of existing shares.
Breville is expected to have a total available liquidity of $497 million.
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