Eroad trading halt lifted after $15.5m capital raising at discount
ERoad's shares are out of their trading halt after the company raised $15.5 million through a share placement.
The company said yesterday that it wanted to raise at least $14 million through a placement of new shares and at least $4 million through a share purchase plan. This morning, ERoad said it had raised $15.5 million from a number of new and existing investors at $3.04 per share, a 4.7 percent discount to its average price over the prior 5 days of trading.
Some $5 million of the shares sold in the placement came from NMC Trustees, its biggest shareholder which is associated with ERoad's chief executive Steve Newman. NMC now holds 21.7 percent of the company.
The firm plans to use $4.5 million to upgrade customer support systems and as working capital for inventory growth, while $5 million will be used to replace non-bank lender funding "to simplify ERoad's funding structure and operational activities", it said. The remaining $8.5 million will be used to "develop and expand disruptive product offerings as well as building a digital ecosystem to better collect and analyse transport data and potential inorganic growth."
The terms of the share purchase plan will be announced in more detail in early 2018, though ERoad said it would mean New Zealand registered shareholders would have the opportunity to pay the lower of the placement price or a discount to the share price at the time.
In an investment presentation accompanying the capital raise announcement, ERoad said it is seeing ongoing growth in New Zealand and Australia, and increasing momentum in North American unit sales. It said revenue in the second half of FY18 will be predominantly driven by growth in new contracted units, recognition of additional revenue for units sold part way through the prior period, and increased recurring revenue per unit at $54 per month.
The shares dropped 3 percent to $3.20 just after the market opened, and have gained 106 percent this year.