CBL to raise up to $63 mln to accelerate expansion plans

Thursday 29th September 2016

CBL Corp, which sells credit surety and financial risk insurance, plans to raise up to $63 million in a share placement to institutional investors and a share purchase plan, giving it more headroom to pursue growth opportunities.

The Auckland-based company will raise $60 million in an underwritten placement to institutional investors at $3.45 a share, an 8.2 percent discount to yesterday's closing price of $3.76, and raise up to a further $3 million in a share purchase plan to eligible investors at the same price, it said in a statement. The new shares will be entitled to CBL's first-half dividend if they're held on the record date, which is expected to be declared next month.

The funds raised will reduce CBL's pro forma debt to $102 million from $162 million, which the insurer says will give it enough room to pursue new opportunities. Those include accelerating existing business lines into new markets, such as selling surety bonds into Spain and Italy, and chasing new acquisitions, with the company in talks to buy a licensed shell insurance company in the US for US$6.3 million.

"Since the IPO (initial public offering) in October 2015, CBL has allocated capital to several profitable growth opportunities including the successful acquisitions of both Assetinsure and PFP and increasing our regulatory capital base," managing director Peter Harris said. "We believe the equity raising will provide the group with the additional financial flexibility to take advantage of exciting long-term growth opportunities CBL has identified."

In June, the insurer announced plans to buy France's Securities and Financial Solutions Europe SA (SFS) for 94 million euros, taking over its biggest customer in a deal expected to lift the credit and financial risk insurer's earnings. Since the deal was announced, the company announced an early repayment of A$55 million of medium term notes and reported a 44 percent increase in first-half operating earnings to $35.1 million.

The share issue will expand the company's stock by 7.9 percent, which CBL said will provide greater liquidity for investors and add new shareholders.

Trading in the stock has been halted pending the placement and is expected to resume tomorrow, with the shares allocated on Oct. 5. The share purchase plan's record date is Sept. 28, with the offer period between Oct. 5 and Oct. 25.

BusinessDesk.co.nz

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