viewDecmil Group Ltd

Decmil Group secures $30 million to fund growth strategy

Funds raised will be used to progress Decmil’s growth strategy in FY22 and beyond, in tandem with reducing reliance on the bank overdraft facility

The company is also launching share purchase plan to raise an additional $2 million.
The company is also launching share purchase plan to raise an additional $2 million.

Decmil Group Limited has secured total funding of $30 million through a $20 million debt financing and $10 million equity placement to fund its growth working capital requirements.

Funds raised will be used to progress the company’s growth strategy in FY22 and beyond, in tandem with reducing reliance on a bank overdraft facility and the company’s surety bonding facilities.

According to the company, its growth strategy is on track with expected revenue of more than $500 million in 2022 and $570 million worth in hand - reflecting a larger group of awarded contracts and potential contract awards emerging in FY22.

Hybrid financing strategy

Decmil CEO Dickie Dique said the hybrid raising would minimise equity dilution while ensuring a healthy balance sheet.

He said: “Crucially, this injection of funds is to drive growth.

“The board has decided that pursuing this hybrid financing strategy is the best option available to attract the necessary funds for this proactive initiative, on terms favourable to the company.

“We are delighted with the support of the capital raising with several new Australian and offshore institutional investors introduced to the share register.

“On behalf of the board, I would like to thank our existing shareholders for their ongoing support with all eligible shareholders on the record date provided the opportunity to participate in the share purchase plan on the same terms as the placement.”

Additional contracts

The new contracts are likely to add to the company’s existing order book of $570 million into FY23, and around 70% of the existing contracts are with government clients.

Following the award and subsequent beginning of work on a significant number of contracts, the company has sought to enhance its cash position to fund mobilisation and bonding.

COVID-19 related delays have shifted the estimated award of several major tenders from FY21 into FY22.

The debt facility

The company’s debt facility comprises a $20 million subordinated debt facility with attaching warrants.

PURE Asset Management is contributing $15 million while the remaining $5 million debt facility is being provided by Horley Pty Ltd (controlled by the Franco Group).

The former specialises in providing secured convertible debt funding to ASX-listed companies with high growth potential, whilst the Franco Group is one of Decmil’s major long-standing shareholders.

This debt facility has a 3.5-year term, with the option of voluntary prepayment subject to early repayment premiums, and a coupon rate of 11%.

Terms of debt facility include a lump sum payment at the end of the term, with attaching warrants for 30.8 million shares at an exercise price of $0.65, with a five-year term.

The issue of the warrants will be subject to shareholder approval which will be sought at a general meeting expected to be held on or about August 30, 2021.

The placement offer

The company has received firm commitments from several high quality domestic and international professional and institutional investors, to raise approximately $10 million.

The placement is strongly supported by Decmil’s existing shareholders and comprises the issue of 25 million shares at an offer price of $0.40 per share, a 7.0% discount to Decmil’s last closing price on 21 July 2021, and an 8.6% discount to the 5-day VWAP.

Participants in the placement will also receive one option for every two shares subscribed for and issued, which will be issued subject to shareholder approval at the EGM.

Placement options will be exercisable at $0.48 each and have a two-year term and will encompass two tranches.

The first tranche of 19,310,639 shares is to be issued pursuant to the company’s 15% placement capacity under ASX Listing Rule 7.1 to raise about $7.7 million while the second tranche comprises of 5,689,361 shares to raise $2.3 million is conditional upon shareholder approval at the EGM.

Euroz Hartleys Limited and Petra Capital are the joint lead managers and bookrunners for the placement.

Share purchase plan

The company is also offering all existing eligible shareholders to participate in a share purchase plan (SPP) to raise up to $2 million.

This SPP will provide each eligible shareholder with the opportunity to apply for up to $30,000 worth of new shares at the same issue price as under the placement. 

Subject to shareholder approval, eligible shareholders will also receive 1 free attaching option for every two shares subscribed for and issued under the SPP. The options will be issued on the same terms as the placement options.

Quick facts: Decmil Group Ltd


Price: 0.35 AUD

Market Cap: $54.3 m

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