Here’s why the AMA Group (ASX:AMA) share price is on the rise today

With fewer cars on the roads during lockdowns, crash repairs have fallen.

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The AMA Group Ltd (ASX: AMA) share price is gaining in intraday trade, up 3.57% after earlier posting gains of more than 7%.

This comes after AMA Group emerged from a trading halt this morning. Trading was paused last Monday, 6 September, pending today’s price sensitive announcement.

We take a look at that below.

What did AMA announce?

The AMA Group share price is on the rise after the automotive parts and smash repair company reported it’s completed the institutional component of its fully underwritten accelerated 1 for 2.80 pro rata non-renounceable entitlement offer.

The Institutional Entitlement Offer, announced on Friday, raised $53 million at an offer price of 37.5 cents per share. That’s a 13% discount to the current AMA Group share price of 43 cents. Those 142 million shares are expected to be issued and commence trading on 21 September.

The underwritten retail entitlement offer is expected to raise $47 million. The offer opens this Friday, 17 September and closes on 30 September.

To participate, investors will need to hold shares by the end of the day tomorrow, 14 September. They’ll be entitled to 1 new share for every 2.8 shares they hold priced at the same 37.5 cents per share.

Topping off the new inflows of capital, the company said it had also successfully priced $50 million of notes. Unless the notes are converted, repurchased or redeemed, they mature on 22 March 2027 at a coupon of 4.0% per year. The notes are convertible to shares at an initial conversion price of 46.88 cents per share.

Commenting on the capital raising, AMA Group CEO Carl Bizon said:

Throughout the Institutional Entitlement Offer and Convertible Notes Offer processes, we were very pleased by the level of support by investors, both for the capital raising, and for our business. It is extremely encouraging to see the level of belief in our business and strategy.

We look forward to the future, as the impacts of COVID-19 related restrictions begin to lift and we can turn our focus to the execution of our strategy as we seek to unlock the value inherent in the AMA Group.

AMA intends to use the new fund to pay back $72.5 million in debt facilities. It will deploy the additional $69.3 million to support growth plans, boost liquidity and provide working capital.

AMA Group share price snapshot

The AMA Group share price has been under heavy selling pressure in 2021, down 46%. That compares to an 11% year-to-date gain posted by the All Ordinaries Index (ASX: XAO).

Over the past month, AMA’s shares have dropped  almost 14%.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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