Industrial parts supplier Coventry Group (ASX:CYG) is set to request $25 million from shareholders to finance a $42.1 million acquisition across the Tasman. The company unveiled the deal on Monday, outlining its intention to acquire New Zealand-based metal fasteners manufacturer, Steelmasters.
Coventry's shares were temporarily halted on Monday to facilitate the placement, with trading resuming on Wednesday. The funding will consist of a $25 million placement alongside a $2 million retail share purchase plan. To cover the remainder of the $42 million acquisition, $18.44 million will be sourced through debt, utilizing NAB's revolving credit facility.
Shares will be offered at $1.45 each, slightly below the previous close of $1.47, with support from strategic investors Viburnum Funds and Sandon Capital. These investors have reportedly committed to covering the institutional raising if necessary.
According to Coventry's announcement, Steelmasters recorded FY23 sales revenue of $NZ40.6 million and EBITDA of $NZ7.35 million. The acquisition is expected to boost Coventry's FY24 revenue to $A400.22 million, with an EBITDA of $A27.5 million, including $A1.1 million in synergies, consequently increasing Coventry's EBITDA margin from 5.4% to 6.9%.
Operating on both sides of the Tasman, Steelmasters presents an opportunity for Coventry to expand its operations and enhance its market position.
