Tabcorp Unveils Share Offering to Secure A$600 Million

The Australian lottery and gambling firm, Tabcorp, has unveiled a fast-tracked share offering to secure up to A$600 million (£329.3 million/€365.3 million/$436.1 million) in fresh capital.

The company has reevaluated its capital management goals to enhance its credit score and hold onto more funds due to the ongoing significant uncertainty surrounding the severity and duration of the disruption caused by the novel coronavirus (Covid-19).

As a consequence, it now aims to decrease its total debt-to-EBITDA ratio to between 2.5 and 3.0 times, down from its prior target of 3.0 to 3.5 times. The firm’s target dividend payout ratio will be lowered to between 70% and 80% of net profit after tax, as no dividend was paid in the fiscal year ending June 30.

During the period, revenue dropped 4.8% year-on-year to A$5.22 billion, while a non-cash impairment charge of A$1.09 billion resulted in a net loss of A$870 million for the year.

The head of the company, David Attenborough, clarified that the capital raised from the share offering will be used to settle existing bank loans and facilitate the transition to a revised debt-to-equity ratio target.

The organization plans to utilize the $600 million to lower its total debt-to-earnings ratio to 3.2 times, a decrease from the current 3.8 times. This will provide Tabcorp with approximately A$1.5 billion in unused bank credit.

Attenborough further stated, “These actions demonstrate Tabcorp’s dedication to preserving its investment-grade credit rating. We are confident that the strength and adaptability of Tabcorp’s diverse business holdings will allow Tabcorp to overcome current market difficulties, and we will continue to focus on implementing our strategy to generate value for investors.”

This is anticipated to strengthen Tabcorp’s financial position, provide greater financial flexibility in uncertain times, and offer additional leeway for financial covenants and credit ratings.

The share offering will be structured as a guaranteed proportional accelerated renounceable rights offering, under which qualified shareholders will be eligible to subscribe for one new Tabcorp share for every 11 shares they currently own.

The new shares will be priced at A$3.25 each, representing a 11.4% discount to Tabcorp’s closing price on the Australian Securities Exchange (ASX) on Tuesday, August 18.

Approximately 185 million new shares will be issued, representing 9% of the company’s outstanding stock.

The firm is distributing 1% of its equity to shareholders.

Large investors can acquire these stocks beginning today, August 19th, and the offer concludes tomorrow. Ordinary investors can also transfer their opportunity to purchase these stocks to other investors.

In the meantime, regular investors in Australia and New Zealand can buy new shares until September 10th. They can also transfer their opportunity to purchase these shares on the ASX from August 24th to September 3rd.

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