ASX-listed AMA Group Limited’s (AU:AMA) share price fell by a whopping 50% in today’s session after it completed a capital-raising initiative to improve its financial position. The company secured AU$55 million through the issuance of new shares at a 37.5% discount, priced at AU$0.075 per share. The company’s need to inject additional capital at a significantly lower price is not an appealing situation and has negatively impacted the share price.
Before that, the company announced its FY23 earnings report, which didn’t benefit the share price much. Year-to-date, the AMA share price has lost more than 70% of its value.
AMA Group holds a dominant position in the aftercare and accessories market for the automotive industry in Australia and New Zealand. The company’s services include damage repair, EV repair, and fleet maintenance.
Let’s dig deeper into some details.
Placement Offer
The funds raised under the recent offer of its fully paid ordinary shares will be used towards the repayment of the existing senior bank debt, amounting to AU$35 million, and to bolster liquidity and working capital. The issue price of AU$0.075 per share reflects a discount of 37.5% compared to the closing price of AU$0.12 on Wednesday, August 30, 2023. Moving forward, the company is anticipated to generate an additional approximate sum of AU$14.9 million as part of the retail entitlement offer.
The company also raised AU$150 million in September 2021 to repay its debt and support its working capital requirements. In Fiscal Year 2024, the company is looking at refinancing its remaining debt facilities.
Annual Results 2023
On Wednesday, the company reported its fourth quarter and full-year earnings for the fiscal year that ended on June 30, 2023. For the fiscal year, the company recorded sales of AU$869.6 million, marking an increase from AU$844.93 million in the previous year. The net loss for the year was AU$144.45 million, compared to AU$144.21 million in 2022. The loss also includes non-cash impairment costs of AU$116.8 million.
In the second half of the year, the company negotiated its stagnant pricing with its customer base to offset the impact of increased costs and labor requirements for repairs. This led to higher prices for the company, accompanied by some volume disruptions.
In terms of outlook, AMA Group is preparing for profitable growth and remains committed to expanding its workforce in the ongoing labor-restricted environment, both domestically and globally.
