The Corporate Travel Management Ltd (ASX: CTD) share price isn't going anywhere on Wednesday.
This morning the corporate travel specialist requested a trading halt.
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Why is the Corporate Travel Management share price halted?
The Corporate Travel Management share price was placed in a trading halt this morning so the company could undertake a fully underwritten equity raising.
The company is seeking to raise $100 million via a $75 million institutional placement and a $25 million share purchase plan. The $75 million placement will be undertaken at $21.00 per new share, which represents a 5.8% discount to the Corporate Travel Management share price at the close of play on Tuesday.
Whereas shares under the share purchase plan will be issued at the lower of $21.00 per new share or the 5-day volume weighted average price on the closing date.
Why is the company raising funds?
Corporate Travel Management is raising funds after entering into a binding agreement to acquire the corporate and entertainment travel businesses in Australia and New Zealand of Helloworld Travel Limited (ASX: HLO).
Management believes the acquisition will be highly complementary to its existing Australian and New Zealand corporate travel management operations. Furthermore, it adds industry verticals which are expected to perform strongly as the recovery from COVID-19 continues.
The two parties have agreed a deal that implies an enterprise value of $175 million, which represents a transaction multiple of 8x normalised pro forma FY 2019 EBITDA. Not all of this will be paid in cash. The release explains that Helloworld will receive transaction consideration of $100 million in cash and $75 million in Corporate Travel Management shares. The latter will be escrowed for 12 months from the date of completion.
Based on the above, management expects the deal to be approximately 3% earnings per share accretive excluding synergies and 7% including full run-rate synergies.
Trading update
Corporate Travel Management took this opportunity to provide a short update on current trading.
Pleasingly, as of 30 November, the company has maintained positive monthly underlying EBITDA during the second quarter of FY 2022. This was despite being impacted by the onset of the Omicron COVID-19 variant.
Furthermore, the company has maintained a strong balance sheet, with operational cash of $102 million and no debt drawn at 30 November.
