Australian Vintage Limited (AVL) has set out its ‘Capital Structure Initiatives’ (CSI) which aim to raise equity of $19.9m to recalibrate net debt and give the business more financial flexibility to navigate challenging industry conditions.
In addition AVL said the plans will better position the business to capitalise on future growth opportunities and execute its Strategic Plan.
The capital raising was proposed through the issue of shares across three plans, two of which are being conducted over yesterday and today. AVL is planning to detail the results of these to the ASX tomorrow, while the third plan closes on Tuesday, 2 July.
The first placement was offered to professional and sophisticated investors, raising approximately $5.5m through the issue of 27,500,000 shares at the Issue Price.
Secondly there is the Institutional Entitlement Offer, where Eligible Institutional Shareholders will be given the opportunity to take up all or part of their entitlement (at the same ratio as under the Offer) under the Institutional Entitlement Offer at the Issue Price. A total of 47,472,140 Shares are proposed to be issued, to raise approximately $9,494,428.00.
A retail component of the offer was also laid out in the prospectus, under which Eligible Retail Shareholders are given the opportunity to subscribe for two New Shares for every seven Shares held on the Record Date, to raise up to approximately $4,942,055.60.
As part of its announcement and details to raise capital, AVL also set out a trading update and outlook, summarising that near-term conditions are likely to remain, margin pressure is expected and that the business will continue its Strategic Review.
AVL said total sales for FY24 are expected to be in the range of $257m to $261m, which is in line with FY23, but is lower than expectations. Sales in AVL’s key ANZ and UK markets are in line with the previous year, with the UK experiencing strong sales growth in May.
The update also highlighted the key reasons for AVL’s capital raise, saying net debt was expected to be in the range of $70m to $75m as at 30 June 2024. This is higher than the previously expected net debt of $43m to $50m.
The net debt levels have been primarily driven by lower-than-expected sales and increased inventory, persistent cost inflation and the timing of receivable collections.
AVL said: “Liquidity requirements are typically higher from July to October due to grower payments, but additional support from NAB and equity raising significantly strengthens AVG’s liquidity position.”
AVL also said it is undertaking a Board refresh program with Richard Davis to retire from the Board at completion of the equity raising and Naseema Sparks not seeking re-election at the upcoming AGM. In addition John Davies will be appointed Interim Chair at completion of the equity raising, while Peter Perrin will remain acting Chief Executive Officer, until Craig Garvin’s replacement is appointed.