29th Jan 2019 13:03
LONDON (Alliance News) - Pennant International Group PLC said Tuesday it raised GBP1.8 million through an oversubscribed share placing and a further GBP330,000 through the exercise of staff stock options.
This comes as the technical training equipment firm announced the GBP6.8 million acquisition of Aviation Skills Holdings Ltd.
In order to fund the acquisition and facilitate further product development, Pennant raised GBP1.8 million through the oversubscribed placing of 1.6 million shares at 110 pence each.
The placing price was a 3.9% discount to the 114.5 pence closing price on Monday. Shares in Pennant were 4.7% lower at 109.10 pence on Tuesday.
In addition, Pennant raised a further GBP331,525 after a number of staff exercised 690,000 share options in the firm at prices ranging from 26.75 pence to 86p each following the acquisition announcement.
Following the issue of the placing and options shares, Pennant will have 36.0 million shares outstanding in the firm.
"We are delighted by the support we have received for this fundraising which will enable us to accelerate our group strategy of increasing both commercial and recurring revenues through the planned acquisition and further investment in innovative new products", Pennant Chief Executive Officer Phil Walker said.
Earlier on Tuesday, Pennant said it 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 purchase price is expected to be capped at GBP6.8 million and is expected to complete within two weeks, Pennant siad.
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.
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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