CSG announces $40m capital raising
- 15 April, 2011 08:41
IT services company, CSG Limited (ASX:CSV), has announced plans to raise $40 million in new equity through a rights issue and an entitlement offer.
The company intends to place $10 million worth of shares to institutional investors, and conduct a one-for-nine rights issue to raise the remainder.
The offer price is a 15.4 per cent discount of the closing price of CSG shares on the day before the raising was announced.
Announcing the offer to investors, CSG said that several recent factors had reduced the company's operating cashflow to below expected levels.
These include the recent flooding in Queensland and earthquake in Christchurch, NZ, the moratorium period on its Brisbane business after an initial loss in a court case against Fuji Xerox, and increased working capital associated with the commencement of its agreement with Canon.
Net debt increased from $78.5 million in 1H11 to $93.5 million at the end of the third quarter.
Accordingly the proceeds from the raising will be used to keep debt from growing too high and make its contractural capital payment commitments.
The company said it spent $14.6 million in capital expenditure during the first half, but expects capex to fall to no more than $6 million in the second half.
Both the placement and the entitlement offer will be fully underwritten. The retail entitlement offer is currently scheduled to open on 20 April and close on 11 May.
CSG entered a trading halt on Thursday prior to making the announcement. CSV shares last traded at $1.300.
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