RPM Automotive Group Ltd (ASX:RPM) has launched an underwritten $1 million share purchase plan at $0.165 per ordinary share following a successful $2 million share placement.
The company has moved to acquire New South Wales-based company Metro Tyre Services with the funds from this combined capital raise.
RPM believes this acquisition will achieve multiple advantages, including expanding the company’s retail footprint to 40 points of contact Australia-wide, increased product range, an improved customer value proposition and cross-sell opportunities – as well as an increase in annualised earnings before interest, taxes, depreciation, and amortisation (EBITDA) by $1.15 million.
RPM has also negotiated a new $26 million back facility with CBA to cover working capital requirements and organic growth.
Strategically important acquisition
“We are very pleased to announce the strategically important acquisition of Metro at attractive acquisition metrics,” RPM Automotive Group CEO Clive Finkelstein said.
“This acquisition will expand our national footprint, increase our product range and enhance our customer value proposition.
“In addition, the debt refinance and equity raise will ensure that our business is fully funded to execute our organic growth plans moving forward.
“We are very confident in the outlook for the consolidated business in FY23 and beyond as we leverage cross-sell opportunities, realise synergies and expand margins across our vertically integrated business model.”
Based on these changes, RPM has updated its 2023 financial year revenue and earnings guidance; the company now expects a revenue range of $125 million-$130 million and EBITDA of $12 million-$13 million on a consolidated basis.
Placement details
Under the placement, the company will issue 12,121,212 new fully paid ordinary shares at $0.165 per share. This price represents a 13.2% discount to the last-close price of $0.19 on December 1, 2022.
Proceeds from the equity raised will be used to fund acquisition consideration, integration costs associated with acquisition and costs of the offer.
New shares issued under the placement will be issued within the company’s existing placement capacity under ASX Listing rules 7.1.
Settlement of the placement is expected to occur on Friday, December 9, 2022.
Directors and executives of the company subscribed for $500,000 in the placement, which is subject to shareholder approval to be sought at an extraordinary general meeting to be announced in due course.
Underwritten SPP
The company will also shortly launch an underwritten SPP for eligible existing shareholders on the same terms as under the placement.
Under the SPP, eligible shareholders will be invited to apply to subscribe for up to $30,000 of shares without the cost of brokerage fees or commissions.
The SPP will be open to eligible shareholders, being shareholders on the company’s register as at 7.00pm (AEDT), Friday, December 2, 2022, and with a registered address in Australia or New Zealand.
This SPP is underwritten by supportive existing shareholder Collins St Value Fund.
Canaccord Genuity (TSX:CF, LSE:CF) (Australia) Limited acted as lead manager to the equity raising and Aitken Mount Capital Partners Pty Ltd acted as co-manager to the offer.
About Metro Tyre Services
Metro Tyre Services is a full-service tyre dealer, providing 24/7 onsite mobile tyre fitting repairs and servicing, specialising in earthmoving, forklift and commercial tyre sales, fitting, service and repairs.
The business is based in Penrith, NSW and generated revenue of $10 million and EBITDA of $1.15 million in FY22.