28th Oct 2024 10:12
(Alliance News) - React Group PLC on Monday announced a placing of new shares to raise working capital as it made a new acquisition.
React is a Birmingham, England-based provider of cleaning and soft facilities management services. Its shares were up 1.2% to 82.00 pence early Monday in London.
React said it has agreed to buy 24hr Aquaflow Services Ltd for up to GBP7.4 million. This includes an initial payment of GBP5.0 million, plus up to GBP2.4 million more in conditional payments based on business performance. The initial amount will consist of GBP4.0 million in cash from existing resources and a debt facility from lender HSBC. The facility will have an interest rate of three percentage points over the Bank of England base rate.
A further GBP480,000 will be paid in June next year, and the sellers of Aquaflow also will be issued 617,283 new React shares.
The React shares will be issued at 81p each, the same price as will be used for a placing of 1.4 million new shares to raise GBP1.1 million for working capital. The placing is being run by brokers Singer Capital Markets Securities and Dowgate Capital.
Aquaflow is a drainage and plumbing services firm operating in London and the south east of England for the past 20 years. In the financial year that ended April 30, Aquaflow recorded adjusted earnings before interest, tax, depreciation and amortisation of GBP1.2 million on revenue of GBP6.1 million.
"The acquisition is expected to be immediately earnings enhancing and contribute significantly to the future profitability of the group," said React Chief Executive Officer Shaun Doak. "This is React's third acquisition and further demonstrates the company's stated inorganic growth strategy."
Updating on its own trading, React said it expects to report adjusted Ebitda of GBP2.4 million in the financial year that ended September 30, up 4.3% from GBP2.3 million the year before, on revenue of GBP20.7 million, up 5.6% from GBP19.6 million.
By Tom Waite, Alliance News editor
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