The DDH1 Limited (ASX: DDH) share price is on the rise following the approval of credit facility from Bankwest. In late-afternoon trade, the drilling company's shares are fetching for $1.06, up 2.9%. At one stage, DDH1 shares reached an intraday high of $1.10, reflecting a record for the newly-listed company.
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Funding for growth
The DDH1 share price entered new territory today after providing investors with a positive update.
According to its release, DDH1 advised that it agreed to the terms with Bankwest to receive debt facilities of up to $60 million. Furthermore, the available funds consist of a $50 million revolving credit line and $10 million in asset finance.
This follows the company's previous announcement in its Initial Public Offering (IPO) prospectus to secure funding to drive future growth.
DDH1 stated that the Bankwest debt facilities represent the sole significant credit line available for expanding its operations. In addition, it paves the way for another third-party, asset-backed finance if needed.
The company is focused on executing its growth strategy in servicing increasing demand from its clients and winning new work. By the first half of FY22, DDH1 is planning to have 103 drill rigs in its arsenal, up from the current 97 to date. This will allow the company to expand operations and further enhance its market position as Australia's leading mineral drilling contractor.
The revolving credit facility has a 5-year term and can be used for a variety of purposes. This includes general corporate purposes including acquisitions, capital expenditure, and working capital. The $10 million asset finance is uncommitted and can only be used for equipment purchases.
Management commentary
DDH1 chief financial officer, Ben MacKinnon welcomed the approval of the credit facility, saying:
We are delighted to have agreed on terms with Bankwest that provide DDH1 with funding to execute our strategic growth plan – at a time when there is increasing market demand in Australia for the high- quality services that we deliver.
The support from Bankwest underscores DDH1's standing as a financially responsible and disciplined mineral drilling sector operator and is built on our strong balance sheet, which had net cash of $3.3 million at 9 March 2021.
Since the company's inception in 2006, DDH1 has established a track record of executing its long-term vision alongside balancing short-term profitability and investment in growth, enabling us to remain consistently profitable while growing market share.
DDH1 share price snapshot
Since listing last month at an issue price of $1.10, the DDH1 share price has slightly lost over 2%. The company's shares notably fell to a low of 81 cents that day, never reaching its issue price until today.
On valuation grounds, DDH1 commands a market capitalisation of roughly $366.8 million, with 342.8 million shares on issue.
