Iress announces equity raising

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Iress (IRE.ASX) has announced the launch of an equity raising to further strengthen its balance sheet, to provide flexibility to respond to opportunities in the current environment, and to partly fund the proposed acquisition of OneVue also announced yesterday.

Iress is undertaking:

  • a fully underwritten placement (the “Placement”) of $150 million to institutional and sophisticated investors; and
  • a non-underwritten Share Purchase Plan (the “SPP”) to eligible shareholders targeting to raise approximately $20 million.

Andrew Walsh, chief executive, Iress said: “The proceeds from this equity raising will be partially used to fund the proposed acquisition of OneVue as well as to strengthen our balance sheet and provide flexibility and capacity to pursue further investment opportunities. While the acquisition was contemplated based on debt funding and could be achieved with available debt, we have decided to adopt a more conservative funding strategy given the current economic environment.

“Following the equity raising targeting $170 million and any successful acquisition of OneVue our net debt to Segment Profit (pro forma December 2019) would decrease to 0.92x. In the absence of this equity raising [1] would have increased to 2.0x (pro forma December 2019), which is higher than we would be comfortable with in the current environment.”

Equity raising details

Placement

The Placement of new fully paid Iress ordinary shares (the “Placement Shares”) is fully underwritten and will be offered to sophisticated and institutional investors in Australia and certain overseas jurisdictions at a fixed price of $10.42 per share (the “Placement Issue Price”). This represents a:

  • 7.0% discount to Iress’ last closing price on 29 May 2020 of $11.21 per share; and
  • 7.6% discount to the VWAP of Iress shares traded during the 5 trading days up to and including 29 May 2020 of $11.2735 per share.

The Placement is expected to result in the issue of approximately 14.4m new shares, representing approximately 8.2% of Iress’ existing ordinary shares on issue.

The Placement is being conducted on 1 June 2020, with Iress’ shares to remain in a trading halt pending completion of the Placement. Trading in Iress’ shares is expected to recommence on 2 June 2020

It is intended that eligible sophisticated and institutional shareholders who bid for an amount less than or equal to their ‘pro-rata’ share of the Placement Shares will be allocated their full bid, on a best endeavours basis.[2]

The Placement Shares are expected to settle on 4 June 2020, and be issued and commence trading on the ASX on 5 June 2020.

Share Purchase Plan

Following completion of the Placement, Iress will be offering eligible shareholders the opportunity to participate in a non-underwritten SPP by applying for up to $30,000 worth of new fully paid Iress ordinary shares (the “SPP Shares”), free of any brokerage or transaction costs. Iress is targeting to raise approximately $20 million under the SPP.

You will be an “eligible shareholder” if you were a registered Iress shareholder as at 7pm (Sydney time) on 29 May 2020, have a registered address in Australia or New Zealand, do not hold Iress shares on behalf of a person who resides outside Australia or New Zealand and are not in the United States or acting for the account or benefit of any person in the United States.

The issue price of the SPP Shares will be the lower of:

  • the Placement Issue Price, being $10.42 per share;
  • the VWAP of Iress shares traded during the 5 trading days up to, and including, the SPP closing date (expected to be 29 June 2020) less a 2% discount, rounded down to the nearest cent; and
  • the closing price of Iress shares on the SPP closing date less a 2% discount, rounded down to the nearest cent.

Depending on the level of demand under the SPP, Iress may decide to scale back applications, or raise an amount higher than $20 million. In deciding to take either of those actions, Iress will focus on treating shareholders fairly. Consistent with that focus on fairness for shareholders, if a scale back is applied, it is Iress’ intention that the scale back will be applied having regard to the pro rata shareholding of eligible shareholders (as at the SPP record date) who apply for SPP shares. However, Iress is not required to conduct a scale back in this way.

Full details of the SPP will be set out in the SPP Offer Booklet which is anticipated to be released to the ASX and dispatched to eligible shareholders on or around 9 June 2020.

Additional information

Placement Shares and SPP Shares will rank equally with existing fully paid Iress ordinary shares from their date of issue.

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[1] As defined in Iress’ debt agreements.
[2] For this purpose, an eligible shareholder’s ‘pro rata’ share of the Placement Shares will be estimated by reference to Iress’ beneficial register on 27 May 2020, but without undertaking any reconciliation processes and ignoring shares that may be issued under the SPP. Unlike in a rights issue, this may not truly reflect the participating shareholder’s actual pro rata share of Placement Shares. Nothing in this announcement gives a shareholder a right or entitlement to participate in the Placement and Iress has no obligation to reconcile assumed holdings (e.g. for recent trading or swap positions) when determining a shareholder’s ‘pro rata’ share of Placement Shares. Iress and the underwriter disclaim any duty or liability (including for negligence) in respect of the determination of a shareholder’s ‘pro rata’ share of Placement Shares.

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