EOH has announced the terms of its rights offer to shareholders: new shares will be offered in the ratio of 227 rights offer shares for every 100 ordinary shares held, the IT services group said on Thursday.
The JSE-listed group has turned to shareholders to raise R500-million as it seeks to deal conclusively with legacy debt weighing on its balance sheet.
Management, led by CEO Stephen van Coller, has said that a successful rights issue will help resolve EOH’s debt problems and position the group for growth.
The rights offer issue price represents a discount of about 30% and 58% to the theoretical ex-rights price and to the EOH share price, respectively, as at market close on Wednesday, 18 January. The rights offer shares will make up about 69% of EOH’s post-rights offer ordinary share capital.
The rights offer is fully underwritten, with shareholders representing some 30% of the issued ordinary shares having provided irrevocable commitments to follow their rights in full. Aeon Investment Management, Anchor Capital and Visio Fund Management have agreed to underwrite the remainder of the rights offer.
“The rights offer has therefore been de-risked,” EOH said. The results of the rights offer will be published on 13 February.
The proceeds of the rights offer, as well as a specific issue of shares to Lebashe Investment Group for R100-million, will be used to settle most of a senior bridge debt facility, reducing interest payments by about R100-million/year.
New facilities
Standard Bank has, subject to the successful conclusion of the capital raise, approved new long-term facilities of R700-million and general banking facilities of R500-million to replace the existing debt, significantly reducing the interest rate on the group’s debt.
“This brings the facilities in line with normal corporate facilities available in the market and significantly reduces the onerous administration of a four-lender syndicate,” EOH said.
“In the context of the legacy issues that the existing business has had to solve, namely the significant debt burden complicated by rising and onerous interest rates, repayments to OEMs (vendors) and the Special Investigating Unit [over legacy corrupt contracts with government entities], the significant support shown by existing and new shareholders is testament to the turnaround of EOH and the quality of the underlying core remaining businesses,” Van Coller said in a media statement on Thursday.
Now read: EOH outlines debt restructuring plan
EOH shares were changing hands at R3 at 11.15am on Thursday, down 3.9% on the session and just above a 52-week low of R2.99. EOH has lost 52% of its value in the past 12 months to Wednesday’s market close. Year to date, the shares are down about 18%. – © 2023 NewsCentral Media
