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Gentrack to sell $90M of shares in discounted offer to repay debt after acquisition spree

Wednesday 4th July 2018

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Gentrack Group will sell shares at a 12 percent discount to raise $90 million to repay bank debt used to fund a recent spate of acquisitions, leaving the door open for more merger and acquisition activity.

Auckland-based Gentrack will sell 14.6 million shares at $6.19 apiece in a one-for-5.77 accelerated pro-rata entitlement offer, fully underwritten by Deutsche Craigs and UBS New Zealand, it said in a statement. That compares to the $7 price the shares closed at yesterday and is a 10 percent discount to the theoretical ex-rights price of $6.88. 

The funds raised will go towards repaying bank debt taken on after a series of four acquisitions totalling $138 million before earn-out payments, which the utilities software developer says will leave it with almost no bank debt and give it a strong enough balance sheet to make more acquisitions. 

"Gentrack continues to investigate potential acquisition opportunities that it may seek to pursue, which would expand its product offering, strengthen its market position and allow growth into new geographies," chair John Clifford said in a letter to shareholders. "The offer provides Gentrack with capacity to pursue these acquisition opportunities in addition to its existing organic growth opportunities, while maintaining a conservative debt position."

Last month the company bought UK-based energy data analysis software and services provider Evolve Analytics for an enterprise value of $44 million, adding to last year's acquisition of UK billing and customer information systems firm Junifer Systems for $74.6 million and European airport software developers Blip Systems and CA Plus for about $20.3 million. 

Trading in the shares has been halted while the institutional offer takes place today and tomorrow and will be followed by a retail offer between July 10 and July 26. 

Gentrack's biggest shareholder Hg, which owns 11.4 percent of the company, will take up the offer, amounting to about $10.2 million, as will chair John Clifford in respect to $2.5 million of stock. 

The stock is rated an average 'hold' based on three analyst recommendations compiled by Reuters, with a median target price of $6.72. 


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