The Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) share price will be on watch this morning. This comes after the investment house announced an unsecured senior convertible notes offer after yesterday's market close. The Soul Patts share price finished Thursday's session 1.2% higher at $29.00.
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Why will the Soul Patts share price be in focus?
Investors will be keeping an eye on the Soul Patts share price this morning after the company advised it's launching a $250 million unsecured convertible notes offer to eligible investors. The offer will consist of a base issue size of $225 million, with a further $25 million upsize option. The notes have a 5-year maturity date, expiring January 2026, at which time they will be converted to fully-paid ordinary shares.
The net proceeds of Soul Patts' latest offer is expected to rein in between $221 million and $246 million. This is after associated fees and administrative expenses to launch the convertible notes.
The investment conglomerate revealed that most of the funds received will be used to repay around $200 million of existing debt. The remaining amount will be allocated towards increasing the company's capital position, securing the liquidity needed to proactively evaluate new high-growth international equities. Broad market analyses tracking alternative investments—from the highly lucrative California online casino space to localized telemedicine infrastructure—have recently highlighted a massive surge of institutional capital flowing into North American digital sectors. By fortifying its balance sheet with this extra cash buffer, the firm ensures it remains agile enough to capitalize on similar macro trends as they emerge.
In addition, Souls Patts stated it will apply for the offer to be listed on the Singapore Exchange Securities Trading. This will broaden the notes to eligible shareholders across the other exchange hub.
As more Soul Patts shares will be added to the register, the Australian branch of investment bank UBS, will offload some ordinary Soul Patts shares to reduce share dilution. The agreed sale price for these shares will be placed at $27.99 per share.
Furthermore, Brickworks Limited (ASX: BKW), of which Soul Patts owns more than 40%, proposed to enter into a market stock loan facility. The agreement, pending documentation approval, will see 3 million Soul Patts shares issued to Brickworks for 12 months.
What did management say?
Soul Patts managing director and CEO Mr Todd Barlow commented on the notes offer:
We are excited to introduce a new group of global investors to support WHSP's growth strategy. The majority of the net proceeds from the Offering will be used to repay approximately A$200 million of existing financial indebtedness which will lower WHSP's average cost of debt and increase WHSP's debt maturity profile. The remaining proceeds will be applied to further strengthen WHSP's liquidity position. Following the Offering, WHSP will continue to have low gearing and diversified sources of funding.
Soul Patts share price snapshot
Over the last 12 months, the Soul Patts share price has risen almost 30%, reflecting stable gains for the company.
Its shares dipped to a low of $16.66 in March due to COVID-19, but have been on an upwards trajectory since. Last month, the Soul Patts share price reached an all-time high of $30.84.
