- Service provider Webcentral Group (WCG) has broken out of a trading halt earlier than expected today after tapping investors for a neat $5.6 million
- The company raised the funds through a $3.1 million placement to institutions, with plans to issue another $2.5 million worth of shares to company directors Joe Demase and Joe Gangi
- Webcentral said it needed the cash urgently to fund normal operations and pursue its growth strategy
- This comes as fellow ASX-listed 5G Networks (5GN) completed an off-market takeover of Webcentral
- 5GN now owns just under 57 per cent of Webcentral after beating a competing Web.com offer and overcoming some regulatory hurdles
- Investors seem supportive of the new direction for Webcentral, with shares in the company up over 14 per cent and worth 24 cents each this afternoon
Webcentral Group (WCG) has broken out of a trading halt earlier than expected today after tapping investors for a neat $5.6 million.
The company requested that trading halt yesterday afternoon, telling investors the halt will last until Monday, November 16, at the latest.
Nevertheless, it seems the company was eager to pocket the fresh funds, announcing the successful capital raise this morning.
Webcentral pulled in the funds through a $3.1 million share placement to institutions, with the remaining $2.5 million coming from issuing new shares to company directors Joe Demase and Joe Gangi.
The issue of shares to company directors is subject to shareholder approval, which Webcentral will seek at a December 18 Extraordinary General Meeting.
Urgent funding
Wedcentral said it has been operating under “strained financial circumstances” for some time, with banks looking over the company’s shoulder and stopping it from carrying on business-as-usual due to some unpaid debt.
In late-October, fellow ASX-lister 5G Networks (5GN) — who has just taken over a majority interest in Webcentral — loaned WCG the necessary funds to pay back its bank debt in full.
Despite this, Webcentral said it still needed urgent capital to fund normal operations and pursue its growth strategy, hence the speedy capital raise this week.
Today, Webcentral said the capital raise shows strong support for the new direction of the company, with the new funds to be used to strengthen operating cashflow and give the company some breathing room moving forward.
The 5GN takeover
5GN lobbed a takeover bid for Webcentral in September, going up against a 10-cent-per-share offer from Web.com.
The 5GN bid offered one 5GN share for every 12 Webcentral shares held by WCG investors. Given 5GN’s share price of around $2 at the time, this valued Webcentral at 17.7 cents per share.
Even after Web.com upgraded its offer price to 18 cents per share, Webcentral still sided with the 5GN off-market offer. The deal faced some regulatory hurdles from Australia’s Takeover Panel, but was eventually given the green light in October.
The 5GN offer closed earlier this week, with 5GN now controlling 56.68 per cent of WCG.
Investors seem supportive of the new Webcentral direction; shares in WCG are trading 14.29 per cent higher this afternoon, currently worth 24 cents each at 2:36 pm AEDT.