DX Group PLC (LON:DX) shares were higher on Thursday after the under-pressure mail delivery firm announced plans to raise £4mln to support its ongoing turnaround plan, and said there were "encouraging signs," although ‘trading conditions remain challenging.”
In late morning trading, DX's shares were up 11.5% to 8.26p.
Posting its first-half results, the AIM-listed group announced plans for a placing of ordinary shares at a price of 7.41p each to raise around £4mln, with the new capital to be used to fund its growth initiatives, including plans to expand the sales teams and enhancing its IT capabilities.
The company, which has been reorganised into two division, DX Freight and DX Express, said early benefits of the turnaround strategy are already in place.
DX said shareholder Gatemore Capital Management LLP has indicated its support for the proposed placing.
In a statement, Liad Meidar, managing partner and chief investment officer of Gatemore Capital said: "We are fully supportive of the turnaround plan and are confident in the management’s ability to deliver long-term growth.
"The business is already heading in the right direction; and we are pleased to see the clean-up of the balance sheet which will pave the way for future profitability. We look forward to working closely with the management team over the course of the three-year plan and beyond.”
DX also said it intends to strengthen its balance sheet with the redemption of its Convertible Loan Notes issued in October and December 2017 via the issue of approximately 335,000,000 new ordinary shares, also at an issue price of 7.41p each.
Losses reduced, revenue up
In its results for the six months ended 31 December 2017, the AIM-listed firm saw its pre-tax loss narrow to £14.1mln, down from a £29.3mln loss a year earlier, as revenue increased to £146.6mln from £142.7mln.
Ron Series, DX's chairman said: “Trading conditions remain challenging, but we are already seeing encouraging signs that our turnaround plans are gaining traction and expect this to build through the year and into 2019.”
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