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Seven Group (ASX:SVW) raises $500M to reduce debt and support growth

ASX 200
ASX:SVW
20 April 2021 03:10 (AEDT)

Seven Group (SVW) has raised $500 million in an institutional placement as the diversified giant looks to refresh its operations.

“Significantly oversubscribed” and with strong support from domestic and international investors, the financing saw roughly 22.2 million fully paid ordinary shares issued to both existing and new shareholders at $22.50 each.

The new shares represent a four per cent discount to Seven’s closing price of $23.43 last Friday.

“We are very pleased with the strong support shown by both current institutional shareholders as well as new investors for SGH’s decision to strengthen our balance sheet and refresh our capacity for portfolio growth opportunities,” said Ryan Stokes, Managing Director and CEO of Seven Group.

Chief among several now-financed initiatives is an aim to cut the company’s overall net debt from $2.6 billion to $2.1 billion.

This balance sheet revival will allow Seven to pursue additional growth opportunities across its primary industries — including both wholly owned companies and strategic investments — following the recent $1 billion acquisition of a 22.98 stake in building materials provider Boral. It was also help to accelerate the retirement of the company’s more costly OEM facilities.

It’s part of Seven’s more disciplined approach to capital allocation — one which is aimed at balancing strategic investments, making opportunistic acquisitions and growing dividend payments to shareholders.

“We have a strong track record of disciplined capital allocation and remain committed to working to generate superior returns from our existing businesses and new opportunities to deliver value for all shareholders,” Stokes added.

With the institutional placement now complete, Seven is looking to raise a further $50 million through a share purchase plan to eligible shareholders.

Those in Australia and New Zealand registered as holders as of Friday, April 16, will be able to purchase up to $30,000 worth of shares at $22.50 each — a 2.5 per cent discount to the company’s five-day volume-weighted average share price.

The plan is scheduled to close on May 10, with the results to be released on May 13.

Seven Group is down 4.1 per cent to $22.47 per share at 1:37 pm AEST.

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