Shares in Superloop Ltd (ASX: SLC) are up and down today after the company announced it has completed the first step of its entitlement offer.
While the Superloop share price spent most of the morning in the green, peaking 3.8% higher at $1.08, it dipped to $1.02 before midday then regained some ground in early afternoon trade. At the time of writing, the Superloop share price is $1.05 – 0.96% up from yesterday's closing price.
The institutional entitlement offer announced yesterday is the first step of the telecommunications and infrastructure company's $100 million capital raise.
Let's take a closer look at today's news from Superloop.
Image source: Getty Images
Successful start to the capital raise
Superloop's institutional entitlement offer, open to sophisticated and institutional investors, has seen it raise $79 million.
The institutional entitlement offer involved 85 million Superloop shares sold for 93 cents apiece. That represents a 10.6% discount on the Superloop share price as of 4 June's close.
Both new and existing investors from Australia and overseas supported Superloop's institutional entitlement offer.
A retail entitlement offer – expected to raise around $21 million – will open next week.
The retail entitlement offer will see eligible Superloop shareholders able to purchase one new Superloop share for every 6.67 shares they hold as of 7pm tomorrow. Each share will cost existing investors 93 cents.
New acquisition
Superloop will use the cash raised to buy Australia's largest independent internet service provider, Exetel.
On top of the $100 million in cash, Superloop will pay $10 million worth of Superloop shares to purchase Exetel.
The acquisition will boost Superloop's customer base by 110,000 – leaving it with 155,000 customers.
Additionally, it will see the companies save a combined $5 million annually.
Once the companies are combined, Superloop's 2021 financial year earnings before interest, tax, depreciation, and amortisation (EBITDA) are expected to be 89% higher than last financial year.
Superloop share price snapshot
Superloop investors need all the good news they can get. Currently, the Superloop share price is down 0.94% from the start of the year, and 3.67% from this time last year.
The telecommunications company has a market capitalisation of around $384 million, with approximately 365 million shares outstanding.
