Seven Group Enters Trading Halt Amid Capital Raising
- Seven Group has entered a trading halt pending a capital raising.
- The Group will raise $550 million to strengthen its balance sheet.
- Seven Group sits just 3.5 per cent from their all-time highs.
Seven Group Holdings (ASX: SVW) has entered a trading Halt following the release of a 19th of April announcement to the ASX. The company is seeking to raise $550 million in Equity with the predominant intention of strengthening their balance sheet. The Capital raising looks to propel the company beyond its already robust response and recovery from the COVID-19 pandemic. In recent months, softness in commodity prices and lagging in the global economic recovery have seen Seven Group Holdings share price consolidate around $23 per share.
Seven Group Holdings is a diversified industrial’s company with significant exposure to oil, gas and media. Seven Group owns Coates hire and AllightSkyse, which provide a range of industrial equipment and leasing services. The company’s largest holding is Seven West Media, another listed company that runs a diversified media company. Further, they also own 23 per cent of industrial building products provider Boral and a 28.5 per cent stake in Beach Energy, a major oil and gas producer.
Seven Group’s main intention of supporting balance sheet flexibility will allow the company to support future growth opportunities. Further, the company intended to significantly reduce net debt from $2.6 billion to $2.1 billion as well as retire Original Equipment Manufacturer (OEM) facilities. In total, the company net leverage will fall from 2.7 to 2.2x for the 1H FY21. Seven Group’s OEM Facilities have interest-bearing at 5 per cent, with their retirement leading to a total of $691 million in undrawn facilities. The cost of further debts will also be reduced from 3.5 to 3.2 per cent.
More recently, the company released their first-half results to the ASX, which saw trading revenues rise 4 per cent to $2.4 billion. This result was driven by strong performance by Westrac and Coates, which saw Earnings Before Interest and Tax rise 14 per cent to $331 million. Increased economic activity, demand for building materials and construction domestically have driven profitability within these sectors.
Seven West Media is looking to buck the negative trends for Advertising expenditure which COVID-19 significantly impacted. In the first half of the calendar year 2021, the total advertising market slumped 20 per cent but rebounded 5 per cent in the second half. In particular 7 plus saw viewership jump 76 per cent.
Shares in Seven Group Holdings last changed hands a $23.43 per share, just per cent from the company’s all-time highs at $24.25. The company shares have rebounded 164 per cent from its March 2020 lows, with shares sitting just 3.5 per cent from all-time highs.