The Motley Fool

Viva Leisure share price lower after $20 million institutional placement

The Viva Leisure Ltd (ASX: VVA) share price is trading lower on Tuesday morning.

At the time of writing the technology-focused Australian health club owner and operator’s shares are down 1% to $2.85.

This follows the announcement of the successful completion of an institutional placement this morning.

What did Viva Leisure announce?

Viva Leisure announced that it has successfully raised $20 million through a placement to institutional investors.

Approximately 7.5 million new Viva Leisure shares are to be issued at a price of $2.65 per share. This was an 8% discount to the last close price.

Management advised that the institutional placement was strongly supported by both existing shareholders and new investors. This includes several new large institutions that will be introduced to the Viva Leisure share register.

Why is Viva Leisure raising funds?

The proceeds of the placement will be used for the acquisition of FitnFast health clubs, new site rollouts, cash-backed bank guarantees for new property leases, and working capital flexibility.

In respect to the FitnFast health clubs, Viva Leisure has executed a binding business sale agreement for 13 FitnFast health clubs for an upfront consideration of $13.5 million.

FitnFast was founded and opened its first location in 2010 in Penrith, New South Wales. Its original focus was on the low cost, big-box model of health clubs. It was a pioneer in the sub-$10 per week gym membership offering.

The acquired centres have a combined membership of over 21,500 members at an average revenue per member of $14.80 per week. Approximately 80% of the membership base is in New South Wales, with 13% in Victoria and 7% in the ACT.

Viva Leisure’s CEO and Managing Director, Harry Konstantinou said: “The support of existing and new institutional investors is extremely encouraging. The funds raised will allow Viva Leisure to continue to implement its stated strategy and grow to be the number one health club owner in Australia and beyond.”

Top 3 Dividend Shares To Buy For 2020

When Edward Vesely -- our resident dividend expert -- has a stock tip, it can pay to listen. With huge winners like Dicker Data (up 147%) and Collins Food (up 105%) under his belt, Edward is building an enviable following amongst investors that are planning for retirement.

In a brand new report, Edward has just revealed what he believes are the 3 best dividend stocks for income-hungry investors to buy now. All 3 stocks are paying growing fully franked dividends giving you the opportunity to combine capital appreciation with attractive dividend yields.

Best of all, Edward’s “Top 3 Dividend Shares To Buy For 2020” report is totally free to all Motley Fool readers.

Click here now to access this free report.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Viva Leisure Ltd. 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.

NEW. Five Cheap and Good Stocks to Buy in 2019…

Our Motley Fool experts have just released a brand new FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.8% fully franked yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.

CLICK HERE FOR YOUR FREE REPORT!