- Vysarn (VYS) intends to raise up to $4 million through a non-renounceable entitlement offer to maintain financial security
- Vysarn provides critical services within the resources, construction and utilities industries
- Through its hydrogeological and dewatering subsidiary, Pentium Hydro, Vysarn is expecting June to bring in the strongest monthly earnings for FY20
- However, the company is using the raise to ensure its strong financial position lasts well beyond FY20
- Vysarn’s shares have dropped 7.27 per cent and are trading for 5.1 cents each
Despite being able to mitigate much of COVID-19’s negative impacts, Vysarn (VYS) is hoping to raise up to $4 million through a non-renounceable entitlement offer.
The three-for-10 offer will issue up to 89.3 million fully paid ordinary shares at $0.045 per share. The offer price represents and 18 per cent to company’s last closing price of $0.055 on May 15 2020.
Vysarn provides production critical services within the resources, construction and utilities industries. This is supported by its subsidiary, Pentium Hydro’s, now fully functioning operating business in the borefield construction space.
It has eight of its 10 rigs under contract and continues to field multiple enquiries regarding rig availability to provide water well services in the resource sector.
During the second half of FY20, Vysarn and Pentium have experienced material growth in revenue and expects this to continue until the end of June.
Earnings before interest, tax, depreciation and amortisation (EBITDA) to the six months ending in December 2019 was $4.53 million. Vysarn expects that the full-year EBITDA to 30 June 2020 will reach approximately $5.90 million. However, it’s worth noting that the majority of second half-year earnings will be realised during the June quarter as rig utilisation moves to eight out of the company’s 10 rig fleet.
The company expects the month of June to bring in the strongest monthly earnings for FY20.
At the end of April 2020, Vysarn had a total of $5.1 million cash and total debt of $8.2 million. Of the total debt, $8 million is required to be paid off over three years from August 2020.
While it remains in a solid position, Vysarn intends for this to continue and will focus on continuing to achieve operational and financial excellence.
The company will try to make sure the eight contracted rigs are fully utilised for the rest of the year and will actively seek to deploy the remaining two.
Additionally, Vysarn is pursuing growth opportunities such as acquisitions and organic business development.
In relation to its equity raise the company believes it’s prudent to raise additional funds to give it flexibility and security to either pursue growth, pay down debt or provide cash reserves if the business sees a contraction in work in the short to mid-term.
Vysarn’s shares have dropped 7.27 per cent and are trading for 5.1 cents each at 3:50 pm AEST.