29th Jan 2019 09:54
LONDON (Alliance News) - Technical training equipment firm Pennant International Group PLC said Tuesday it plans to raise up to GBP1.8 million through a share placing.
This comes as it aims for the GBP6.8 million acquisition of Aviation Skills Holdings Ltd.
Pennant has agreed to buy aviation training firm Aviation Skills for an initial GBP250,000 payment. On completion of accounts, Pennant could pay up to a further GBP750,000 with further multi-year earn-out payments thereafter.
The buy is expected to be capped at GBP6.8 million and is expected to complete within two weeks.
For the year ended January 2018, Aviation Skills generated GBP27,000 net profit on revenue of GBP398,000. For the year ending January 2019, the firm is expected to generated GBP175,000 in pretax profit.
For comparison, Pennant generated GBP1.8 million in pretax profit on revenue of GBP18.1 million in 2017. Pennant's results for 2018 are expected to be published on March 12.
In order to fund the acquisition and facilitate further product development, Pennant has proposed to raise up to GBP1.8 million through the placing of 1.6 million shares at 110 pence each.
The placing price is a 3.9% discount to the 114.5 pence closing price on Monday. Shares in Pennant were 4.6% lower at 109.26 pence on Tuesday.
In addition, following the acquisition announcement, a number of staff have indicated their intention of exercising 690,000 share options in the firm at prices ranging from 26.75 pence to 86p each. This is expected to raise GBP331,525.
Pennant also reiterated its guidance for 2019, with its financial performance now expected to be "significantly" weighted to the second half of the year.
Consequently, the first half is expected to show a loss as its Middle East contract will see costs fall in the first half but revenue delivered in the second.
Pennant also extended its overdraft facility with Barclays PLC in order to meet working capital outflow as its two key contracts enter production phase. The overdraft is now GBP3.0 million from the initial GBP1.5 million and is currently undrawn.
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