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- Automotive aftermarket company, Bapcor (BAP) is looking to raise up to $210 million as it pushes ahead with an unchanged five-year strategy
- Despite the challenges presented by COVID-19, the company has reaffirmed its targets and announced a capital raising to help it achieve them
- Bapcor will carry out a fully underwritten $180 million institutional placement, followed by a $30 million share purchase plan
- The company also provided a business update today, stating that while it achieved an overall growth in revenue in March, this was dragged down by the closure of approximately two-thirds of its New Zealand stores
- Company shares are unchanged so far today, worth $4.81 each
Bapcor (BAP) is looking to raise up to $210 million to reduce its net debt and carry out its unchanged five-year strategy and targets.
The capital raising
The company today announced a fully underwritten $180 million institutional placement and a $30 million share purchase plan (SPP). The placement will see approximately 40.9 million shares issued on April 21, at a price of $4.40 each.
This will be followed by the SPP, open to existing shareholders in Australia and New Zealand. The SPP will be capped at $30,000 per shareholder and a $30 million aggregate.
The capital raising will enable Bapcor to reduce its net debt. Following the placement, it will have a pro forma net debt of $254 million as at March 31, 2020. The share purchase plan will then provide Bapcor with additional proceeds.
Business update
Despite the challenges presented by COVID-19, CEO and Managing Director Darryl Abotomey maintains the automotive aftermarket company will push ahead with an unchanged five-year strategy.
“As a market leader with scale and a solid financial position, Bapcor is well-positioned to respond to the changes caused by the COVID-19 disruptions and continue to serve our customers through this period,” Darryl commented.
“Our 5-year strategy and targets remain unchanged and this capital raising strengthens our position to execute on these plans and any other opportunities that arise,” he said.
Due to the pandemic, the company has withdrawn its earnings guidance and implemented a raft of cost-cutting measures as Mr Abotomey explained.
“Bapcor is utilising multiple operational and financial levers to manage cash flow and liquidity. These include reducing all non-essential expenditure, reductions in Board and Executive salaries, managing working capital, deferring all non-essential capex, reducing staff costs in proportion to revenue declines, discussing with landlords rent relief and obtaining government subsidies,” he said.
While Bapcor experienced a group revenue growth of 12.7 per cent in March compared to the prior corresponding period (pcp), this was felt differently by Bapcor’s operations across the Tasman.
Australian operations experienced a 15.6 per cent increase in revenue for March compared to the pcp. Whereas in New Zealand, where the level four government lockdowns has prompted the closure of two-thirds of Bapcor’s stores, revenue for March declined 16.1 per cent on the pcp.
The challenging economic conditions brought about by the pandemic are continuing, with certain segments of Bapor’s business impacted more profoundly.
“Our largest business segment, Bapcor Trade, performed well through March but has seen the impact of COVID-19 government-imposed restrictions in April with month to date revenue down approximately 20 per cent versus expectations,” said Mr Abotomey.
“April revenue in our Specialist Wholesale and Retail segments were below expectation and prior corresponding period, excluding the acquisition of the Commercial Vehicle Group. Bapcor New Zealand trading continues to be significantly impacted by lockdown measures with revenue down approximately 85 per cent in April,” he concluded.
Company shares are unchanged so far today, worth $4.81 each.
