NZX-listed transport technology firm EROAD has been admitted onto the Australian Stock Exchange (ASX) and is now seeking to raise NZ$50 million.
The company will be dual-listed and will trade on the ASX under the ticker code ‘ERD’ from September 18.
It plans to raise the capital via a $42m underwritten placement at NZ$3.90 a share (AU$3.59), together with an $8m share purchase plan (SPP).
EROAD went into a trading halt ahead of the announcement which represents a 10.3% discount to the last close price on the NZX on September 14 of NZ$4.35 per share.
The company says the $50m in new capital will help accelerate the execution of growth strategies in product development, sales and marketing.
EROAD’s largest shareholder, NMC Trustees Limited, is intending to offer up around 1.4 million of its shares (representing up to 10% of NMC Trustees’ shareholding) for sale concurrent with the placement.
EROAD chief executive Steven Newman has an indirect interest in the shares held by NMC Trustees.
The company says Newman “remains fully committed to EROAD and NMC Trustees is expected to remain EROAD’s largest shareholder post sell-down”.
It first announced it was seeking an ASX listing on August 21 and says this will “facilitate greater access to capital and provide alignment with the company’s business operations and investor base”.
EROAD says it intends to remain a New Zealand domiciled business, “committed to its New Zealand investor base, and listed on the NZX”.
EROAD chairman Graham Stuart says the company has “significant growth and revenue opportunities as penetration of telematics continues globally”.
“With the ASX listing, now is the opportune time to raise capital which will increase liquidity, broaden our investor base and allow EROAD to accelerate its growth strategies as it heads towards 250,000 connected vehicles,” Stuart says.
The SPP will open on September 23 and close on October 2 to shareholders with registered addresses in New Zealand and Australia.
The price for the SPP will be the lower of the price paid by investors in the placement or a 2.5% discount to the five day volume weighted average price of EROAD shares traded on the NZX.
EROAD will remain in a trading halt until the completion of the placement, or by the market’s open tomorrow.
Bell Potter Securities Limited and Canaccord Genuity (Australia) Limited acted as joint lead managers and underwriters to the placement.
FY21 outlook and H1 FY21 results guidance
EROAD “remains confident” of continued growth in contracted units and monthly Software as a Service (SaaS) average revenue per unit (ARPU) in FY21, “albeit at lower levels than delivered in FY20”, the company says.
“Contracted unit growth is expected across New Zealand, North America and Australia, despite longer sales lead- times due to COVID-19. FY21 EBITDA is expected to be impacted by COVID-19 debtor collectability as well as continued investment in future growth and improvements in operating leverage,” it says.
Given the proximity of the capital raise to the period end, EROAD has provided H1 FY21 market guidance of expected revenue of between $43.5m – $44.5m, EBITDA between $12m – $14.2m and between 120,000-122,000 contracted units.
In June this year, EROAD posted profit before tax of $1.4m for its 2020 financial year.
This was up from a $5.1m loss in the prior year and saw revenue grow 32% to $81.2m with strong contributions from the New Zealand and North American markets.
New Ehubo to arrive
In July, EROAD also released a new logbook app designed to help drivers and fleet managers comply with rules and fatigue management.
The company also announced it would be releasing a new version of its Ehubo device before the end of year. More details will follow, but it’s being described as a next generation unit featuring driver-facing smart cameras and driver fatigue detection capability.
