Superloop to nip debt in the bud with $90m capital raise

Cloud services connector Superloop (ASX: SLC) is offering up shares at an 18.8 per cent discount to raise $90 million so it can pay off debt.

The institutional placement and entitlement offer at $0.82 a share are a far cry from the $1.95 per share QIC Private Capital was proposing for a buyout in May, which failed to produce an agreement.

Since then the Brisbane-based company has faced challenges including a $50.7 million impairment charge that cut its FY19 result, although the group is forecasting an improved FY20 underlying earnings guidance of $14-16 million. 

Now the group is seeking to clean up its finances by cutting down its debt plus net payables from $93.5 million to $7.5 million.

In parallel, Superloop has restructured its senior debt facility with ANZ and Westpac for four years and with a limit of $61.7 million, which the group says will bring a "funding runway for future success-based growth capital".

"Superloop has invested over $256 million in fibre network assets, and continues to make progress in monetising the value of those assets," says chairman Michael Malone.

"The support from Superloop's senior lenders has been invaluable, but it is necessary and appropriate to restructure those facilities to provide a platform for Superloop to continue to access funding on favourable terms to support its monetisation strategy.

"This capital raising achieves that objective, reducing the senior debt with a restructured five-year facility that provides funding for the incremental investment on Superloop's core network."

The equity raising consists of approximately 110 million new shares, including a fully underwritten two-tranche placement to institutional investors to raise around $55 million, as well as a fully underwritten 1 for 6 accelerated non-renounceable entitlement offer to raise around $35 million.

The retail entitlement offer will open on 30 September with a cut-off date of 14 October and results expected on 17 October. 

Business News Australia