- Corporate travel specialist Serko (SKO) has entered a trading halt today as it prepares to tap investors for NZ$55 million (around A$50.8 million)
- The company plans to raise around $41.5 million through a share placement and $9 million through a share purchase plan
- Seko has requested the trading halt to complete the bookbuild process and determine the price of the new shares to be issued as part of the raise
- While the placement has been fully underwritten at a floor price of $4.02 per share, the price of the purchase plan is still undetermined
- Serko says is topping up its balance sheet to gear up for growth opportunities in a COVID-19-affected world
- Shares in Serko last closed at $4.17 each yesterday afternoon
Corporate travel specialist Serko (SKO) has entered a trading halt today as it prepares to tap investors for NZ$55 million (around A$50.8 million).
The New Zealand company plans to raise the funds in two parts: NZ$45 million (roughly A$41.5 million) through a share placement, and NZ$10 million (roughly A$9 million) through a share purchase plan.
The company has requested a trading halt so it can complete the bookbuild process and determine the price of new shares to be issued under the capital raise.
Nevertheless, Serko said the placement has been fully underwritten at a floor price of NZ$4.35 (around A$4.02) a pop, which represents a 3.5 per cent discount to the company’s last closing price.
For mum and dad investors wanting to top up at a discount, Serko said they can subscribe for up to NZ$50,000 (roughly A$45,000) worth of new shares under the share purchase plan. The price for this part of the cap raise is also yet to be finalised. Serko said the final terms of the purchase plan will be announced on Wednesday, October 7.
Why the raise?
While the COVID-19 crisis certainly struck a brutal blow to travel stocks, Serko CEO Darrin Grafton said the coronavirus has created opportunities to speed up the development and rollout of the company’s tech to its Travel Management Company (TMC) and reseller partners.
“In recent months, we have received inbound demand from these organisations as they consider, plan and request accelerated timetables to onboard new customers, deliver new features and expand existing partnerships,” Darrin said.
“This demand has exceeded our expectations and is highlighting increased opportunities from a changing travel industry,” he explained.
Moreover, while the company has $33.6 million in the bank, it said the timing of meaningful revenue generation is still uncertain. As such, Serko is topping up its balance sheet to gear up for more growth opportunities in a COVID-19 world.
“Serko’s priority is to ensure it has the resource and capacity to execute on its strategic priorities, positioning the company for growth when business travel normalises and to capitalise on opportunities arising from changes to the travel industry,” Darrin said.
He reaffirmed, however, that things are still too uncertain to accurately forcast operating revenue for the 2021 financial year.
Shares in Serko last closed at $4.17 each yesterday afternoon. The company has a $393.2 million market cap.