The Superloop Ltd (ASX: SLC) share price will be one to watch this week after the independent provider of connectivity services launched another capital raising.
What is Superloop raising?
This morning Superloop announced that it is raising $90 million at $0.82 per share via a fully underwritten two-tranche institutional placement of $55 million and a fully underwritten 1 for 6 accelerated non-renounceable entitlement offer to raise approximately $35 million.
The offer price of $0.82 per new Superloop share represents a 18.8% discount to the closing price of Superloop shares on September 20 and a 13.9% discount to the theoretical ex-rights price.
Management advised that the proceeds of the capital raising will be applied principally to pay down senior secured debt. This is expected to reduce its net debt plus net payables from $93.5 million to $7.5 million and provide a ~$60 million funding runway for future success-based growth capital.
Superloop’s Chairman, Michael Malone said: “Superloop has invested over $256 million in fibre network assets, and continues to make progress in monetising the value of those assets. 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,” he added.
This is the second time this year that the company has raised capital. In February the company raised $30.87 million through an institutional placement and retail entitlement offer. These funds were raised at $1.25 per share.
Shareholders will no doubt be hoping that this is the final time the company requires a dilutive cash injection to execute its business plan.
Should you invest?
As I mentioned before, when the dust settles on this capital raising it could be worth taking a look at Superloop. After all, it does have a positive long term outlook.
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James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of SUPERLOOP FPO. The Motley Fool Australia owns shares of and has recommended Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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