Amalgamated Holdings has become the latest company to approach shareholders for money with the announcement yesterday that it is looking for $107 million.
The Sydney-based group yesterday chose Melbourne Cup Day to reveal a discounted a one-for-five renounceable entitlement offer at $4.10 per share.
The company, which is controlled by the Rydge family of Sydney and associated interests, won’t have much trouble raising the money.
Amalgamated said the company’s major shareholders, who hold about 70% of the issued capital, have pledged to subscribe for, or procure subscriptions for, all of their entitlements.
Therefore there was no need to have an underwriter.
"AHL’s Major Shareholders (Alphoeb Pty Limited, Carlton Investments Limited, Enbeear Pty Limited, Investors Mutual Limited, Maple-Brown Abbott Limited, Perennial Value Management Limited and Alan Rydge), which in aggregate hold approximately 70% of the issued capital of AHL, have each entered into arrangements under which they have committed to subscribe for (or procure subscriptions for) all of their Entitlements," the company said in its documentation lodged with the ASX.
The issue price is $1.87 a share under the closing price Monday of $5.97, a hefty discount of around 32%, which should further guarantee its success among non-insider shareholders who account for around 30% of the issued capital.
On top of being able to purchase one new share for each five existing Amalgamated shares held eligible shareholders may also apply for additional shares.
Amalgamated managing director David Seargeant said the company had made "a number of hotel and cinema acquisitions and property developments, and we expect to continue to pursue such opportunities in the future.
"Over the past 3 years AHL has invested over $275 million in capital expenditure and acquisitions. AHL has undertaken a number of hotel and cinema acquisitions and property redevelopments and expects to continue to pursue such opportunities in the future.
"The proceeds of the Entitlement Offer will be used to strengthen AHL’s capital base and provide increased financial flexibility to pursue growth opportunities."
The company expected to maintain a dividend of 32 cents per share for 2009/10, fully franked, "subject to any unforeseen circumstances".
In a presentation to investors, Amalgamated said it had a pre- tax profit of $42 million in the three months to September, which was up 35% from the prior comparable period.
The company said the strong performance of its German cinema business, and domestic operations in Australia, had contributed to the earnings result.
Amalgamated operates the Greater Union cinema chain in Australia.
Amalgamated’s hotel business (it operates the Rydges Hotels and Resorts chain) has seen early signs of strengthened demand, while the Thredbo ski resort was "impacted by inconsistent conditions over August and September". (i.e. poor snow conditions).
Amalgamated shares were up 8 cents at $6.05 at one stake. the fell in later trading to close 2 cents lower at $5.95.
And while Amalgamated is raising cash to finance its expansion plan, drilling services group, Boart Longyear raised well over $700 million in new capital to slash debt and give the company a chance to survive.
Yesterday, Boart revealed that the capital raised ($A771 million) had enabled it to cut debt by 90% to less than $US100 million ($A110 million).
It completed a share purchase plan that was heavily oversubscribed.
"The SPP resulted in over 10,000 applications to purchase additional shares, comprising over US$118 million in aggregate investor demand.
"Consistent with its previously outlined intentions, the Company has elected to limit the total size of the program to approximately US$75 million and has issued approximately 308.9 million new ordinary shares under the SPP at an issue price of A$0.27 per share," the company told the ASX in a statement.
The company revealed the capital raising in May to reduce debt and ahead of expected lower earnings in 2009, as the global financial crisis slashed activity in the mining industry.
At the time, the company said it aimed to cut its net debt, which stood at $US764 million ($A840 million) at the end of December.
"With a stronger balance sheet, the company is now well positioned to take full advantage of the opportunities created by the recovery in the resources cycle," CEO Craig Kipp said in the statement.
Boart Longyear said it expects to record about $US17 million ($A18.7 million) in pre-tax, one-off, primarily non-cash expenses in the second half of 2009 related to the capital raising, the early retirement of debt and certain floating-to-fixed interest rate obligations.
Boart shares were up half a cent at 28 cents yesterday.
Shares in Myer bounced back yesterday, rising 1.6% or 6 cents after falling 8.5% after listing on Monday.
By the close yesterday Myer shares were trading 6 cents higher at $3.84 on turnover of over 29.9 million shares.
That was still 29 cents below its listing price of $4.10. The overall market was off a fraction yesterday.
