14th Dec 2015 08:43
LONDON (Alliance News) - Tribal Group PLC on Monday said it plans to raise up to GBP30.0 million in a rights issue early next year in order to cut debt and provide working capital, with the education support services company also planning a move to London's AIM junior market to help lower costs.
The group said it has suffered from "slow" sales momentum, while several "key customer contract milestones" have moved into 2016, meaning that adjusted operating profit for 2015 is likely to be "significantly lower" than expected.
Shares in Tribal Group dropped 53% to 25.50 pence on Monday morning following the announcement.
"Under the terms of some of our larger contracts, invoicing and payments from customers are linked to customer programme milestones. In some cases, these milestones are not wholly within the company's control," Chairman Richard Last said in a statement.
"Consequently, a number of significant cash receipts which had previously been anticipated to be received during the second half of 2015 may now be deferred into 2016, thereby increasing expected net debt at the year end," Last said.
Tribal Group has warned its lenders that it may breach the covenants of its revolving credit facility, under which the group is able to borrow up to GBP50.0 million.
The terms of that facility dictate that net debt should be no more than three times to earnings before interest, tax, depreciation and amortisation, while the senior interest coverage ratio should be no less than three times.
The group has begun talks with its bankers to "negotiate amendments to the operation of covenants and the waiver of any event of default that may result from our current trading performance".
Tribal said that GBP30.0 million of its rights issue has been underwritten on a standby basis by Investec ahead of launch in the first quarter of 2016. The move to AIM from London's Main Market will take place following its completion. Tribal said it will provide more details on the rights issue when it releases its 2015 results.
The group said it has made "good progress" on appointing a new chief executive, after Keith Evans in May said he intends to retire and step down.
By Samuel Agini; [email protected]; @samuelagini
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