Bell Gully is advising NZX/ASX listed company Gentrack on an accelerated entitlement offer as it seeks to raise approximately NZD$90 million to pay down debt from recent acquisitions. Gentrack provides essential software services to utilities companies and airports.
Under the offer, eligible shareholders will be entitled to subscribe for one new share for every 5.77 existing shares held on the record date at an application price of $6.19 a share. The application price reflects an 11.6% discount to Gentrack's closing share price before the offer was announced.
The accelerated entitlement offer structure continues to become increasingly popular as an equity capital raising structure for listed companies. As the offer to institutional shareholders can be accelerated and completed over several days, rather than the weeks afforded to retail shareholders, it provides quicker access to a portion of the proceeds and increases transaction certainty.
In this case, Gentrack launched the offer first thing on Wednesday 4 July 2018 and had closed the institutional portion of the offer by the end of Friday 6 July 2018 - raising $52.4 million of the targeted $90 million. The balance of the proceeds will be raised through the retail portion of the offer, which will close at the end of the month.
This structure is also popular as non-participating shareholders can receive value for their entitlements through the separate institutional and retail bookbuild processes. In Gentrack's case, non-participating institutional shareholders will receive $0.50 for each entitlement not taken up (less any applicable taxes).
The NZ regulatory regime is now much more streamlined for accelerated entitlement offers. They can be executed relatively efficiently under the "cleansing notice" regime under the Financial Markets Conduct Act and the class relief for accelerated offerings granted by the NZX last year. Also, companies like Gentrack that are listed in Australia can extend the offering to Australian shareholders without additional disclosure requirements.
Earlier this year, Bell Gully advised Fletcher Building Limited on its equity capital raising, which adopted the same structure.
The Bell Gully team advising on the Gentrack accelerated entitlement offer was led by partner .Toby Sharpe.