AWF to raise $14 mln in rights issue, appoints Simon Bennett as new CEO

Monday 23rd February 2015

AWF Group, the contract labour firm, plans to raise up $14 million in a rights issue to repay bank debt used to buy white collar recruitment agency Madison last year, and named Madison boss Simon Bennett to take over as chief executive in July.

The Auckland based company will offer existing shareholders the right to buy one new share for every four they own at $2.10 apiece, a 16 percent discount to last trading price at $2.50 on Friday. The rights issue is fully underwritten by Deutsche Craigs, and proceeds will repay bank debt used to fund the Madison acquisition, it said in a statement.

"As previously announced to shareholders, the board undertook to consider an equity capital raising to reduce the company's debt levels it assumed on the acquisition of Madison, once it had validated the transaction and its integration into AWF Group," chairman Ross Keenan said. "Madison has now successfully completed its first year under AWF ownership and the board and the board considers this to be the right time to proceed with this equity raising."

AWF shareholders approved the $36 million Madison acquisition in 2013, which was forecast to lift underlying earnings to $8 million and sales to $200 million in 2015.

The offer opens on March 11 with a March 4 record date, and close on March 26.

In presentation slides, the company said it will look to grow by development or "acquisition of adjacencies" of which $2 million to $4 million could be funded through cash flow. Larger targets, of around $10 million to $12 million would likely need bank funding.

AWF plans to rebrand its corporate unit in the near term to remove market confusion, it said.

Separately, AWF said Madison Recruitment boss Simon Bennett has been selected to replace outgoing group chief executive Mike Huddleston from July of this year.

BusinessDesk.co.nz

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