EOH has issued the final terms of its rights offer that will see it pay off its legacy debt.
EOH has issued final terms of its rights offer and its specific issue of shares to its strategic investment partner Lebashe Investment Group. The combined capital raise from the rights issue and specific issue will amount to R600 million.
“Securing the success of the rights issue and capital raise will bring significant and immediate benefits to EOH,” says EOH CFO Megan Pydigadu. “We will save approximately R100 million per annum in interest charges based on current interest rates, freeing up resources to invest in numerous exciting growth opportunities.”
The technology firm, which is looking to raise funds to reduce its legacy debt, has explained that, given the structure of the rights issue, all existing shareholders who follow their rights will experience no dilution in their shareholding.
The company has already received irrevocable undertakings from existing shareholders representing 30 percent of the issued shares to follow their rights in full. The rights offer issue price of R1.30 represents a discount of approximately 30 percent to the theoretical ex-rights price (TERP) which is in line with the average discount to TERP of the last 10 rights offers of similar sized offerings relative to market capitalisations.
The proceeds of the rights offer and specific issue will be used to settle the majority of the senior bridge facility, reducing interest payments by approximately R100 million per annum.
Standard Bank of South Africa (acting through its Corporate and Investment Banking division), has, subject to a successful conclusion of the capital raise and fulfilment of conditions precedent, approved new long-term facilities of R700 million and general banking facilities of R500 million to replace the existing debt, which significantly reduces the margin above JIBAR that EOH pays.
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.