AusGroup gets $13m lifeline
Singapore's DBS Bank will place with investors a stake of just under 20 per cent in AusGroup in a deal which throws the struggling contractor a $13 million lifeline.
The conditional agreement comes after the Perth-based company suffered a $15 million loss in the September quarter and breached banking covenants.
AusGroup said it would issue the new shares at S16.8c each for net proceeds of $S15.2 million ($13.4 million).
The contractor's shares surged more than 20 per cent on the Singapore Exchange today in response to the announcement. They were S23c at 10.49am, after hitting a high of S25c.
The stock dived last month after a Singapore brokerage suggested AusGroup was at risk of insolvency.
The company said the cash would be used for working capital and to provide collateral for contract bonding requirements.
AusGroup last month paid off its debt with ANZ Bank and HSBC Australia. It said new banking arrangements were on track to be finalised early this year.
"The placement is a great way to start the year, boosting working capital as we work closely with new and existing customers to target opportunities in a changing market," managing director Stuart Kenny said.
"We also expect to continue increasing our exposure to the growing oil and gas sector in the coming year," Mr Kenny said.
"Combined with the recent repayment of senior debt, this is positive news as we set about building market confidence, delivering for our customers and creating a platform for enhancing shareholder value."
AusGroup has an order book of $219 million.
