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VYSARN LIMITED — Capital/Financing Update 2020
May 17, 2020
66029_rns_2020-05-17_fb7e74cf-7613-4671-8b2e-f0e906a77a10.pdf
Capital/Financing Update
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ASX:VYS
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18 May 2020
OPERATIONAL UPDATE AND EQUITY RAISE
The Board of Vysarn Limited ( ASX: VYS ) ( Company ) is pleased to be able to provide the following operational update and outlook.
The Company's wholly owned subsidiary Pentium Hydro Pty Ltd ( Pentium ) has now established itself as a fully functioning operating business in the borefield construction space. Pentium has 8 of its 10 rigs under contract and continues to field multiple enquiries regarding rig availability to provide water well services in the resource sector.
During the second half of FY20, the Company has enjoyed material growth in revenue, particularly in the latter months and this is expected to improve further leading up to the end of the financial year. Operating expenditure and corporate overhead trends have been established during this period and management is confident that costs will remain stable for the foreseeable future subject to growth requirements.
While the Company hasn’t been immune to the economic disruption caused by the COVID-19 pandemic, management has been able to successfully navigate the restrictions imposed by the state and federal governments particularly on the movements of our people to remote locations. As such, the Company has been able to mitigate any COVID-19 associated downturn in revenue or cost increases for the time being. Potential COVID-19 business interruptions continue to be monitored closely.
As outlined on pages 7 and 8 in the half year results presentation released to the ASX on 28 February 2020, the reviewed EBITDA to 31 December 2019 was $4.53m (prior to transaction costs and share based payments but including gain on bargain purchase). Pleasingly, the Board expects that the full year EBITDA to 30 June 2020 will be approximately $5.90m. It is worth noting that the majority of second half earnings will be realised within the June quarter as rig utilisation moves to 8 out of the company's 10 rig fleet.
June quarter earnings will cover a period with 6 rigs working in April and May, material mobilisation costs in May for the deployment of 2 further rigs and with 8 rigs predicted to contribute full month earnings for the entirety of June. The month of June is therefore expected to provide the Company with its strongest monthly earnings performance to date. As such, the Board expects that subject to maintaining a utilisation rate of 8 rigs, the month of June will provide management with its first visibility of achievable average monthly maintainable EBITDA leading into the new financial year.
Vysarn Limited | ABN: 41 124 212 175 | ACN: 124 212 175 | 108 Outram St, West Perth, WA 6005 | PO Box 1974, West Perth WA 6872 T +61 (0) 8 9486 7244 | F +61 (0) 8 9463 6373 | E [email protected] | vysarn.com.au
As at 30 April 2020 the unaudited management accounts showed that the Company had total cash of $5.1m and total debt of $8.2m. Of the total debt, $8.0m is a facility that is required to be amortised with principal and interest payments over a 3 year period from August 2020.
Looking beyond the delivery of a credible first partial year FY2020 result (following the purchase of drill rigs from Ausdrill Northwest Pty Ltd in late August 2019), management intends to consolidate the Company’s position in the borefield construction market. A strong focus will remain on achieving operational and financial excellence within the core business. Asset utilisation, return on assets and business growth will form the backbone of the short term strategy.
The Company will work towards keeping the current 8 contracted rigs fully utilised for the year while aggressively pursuing opportunities to deploy the remaining 2 rigs within the fleet. Management is confident that the current push to complete robust safety management systems and ISO accreditations in safety, quality and environment will provide opportunities to qualify as preferred contractors for Tier 1 clients therefore providing expanded opportunities for the subsequent deployment of the remainder of our fleet in FY2021.
Growth opportunities are being pursued by the Company. This consists of acquisition opportunities, both horizontal and vertical, as well as organic business development. Management is currently considering a range of growth opportunities both within and beyond the current business.
Despite the strong performance of the Company to date and the positive outlook for FY2021, the board and management of the Company are mindful of the precarious backdrop that has been provided by the COVID-19 induced global economic uncertainty. The Company is ultimately exposed to the ongoing success or otherwise of the Australian resource sector. With this in mind, the Board considers it prudent to raise additional funds via a nonrenounceable rights issue (see below) to give the Company optionality to either execute growth strategies, to pay down debt or to provide valuable cash reserves should the core business see a contraction in work in the short to mid-term.
NON-RENOUNCEABLE ENTITLEMENT OFFER
The Company is therefore announcing that it is undertaking a 3 for 10 nonrenounceable entitlement offer of up to ~89.3 million fully paid ordinary shares at an issue price of $0.045 per share to raise up to approximately $4 million ( Offer ).
The Offer price of $0.045 per share represents a discount of 18% to the Company’s last closing price on the ASX on 15 May 2020 of $0.055.
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The Offer will be conducted pursuant to a prospectus to be lodged by the Company with ASIC and the ASX on or around Thursday, 28 May 2020 ( Prospectus ) and will be open to all shareholders with a registered address within Australia or New Zealand who hold shares on the record date of Wednesday, 3 June 2020. The Offer will open on Tuesday, 9 June 2020 and will close on Tuesday, 23 June 2020 (unless extended).
The Company also intends on seeking shareholder approval at a general meeting to permit certain directors to participate in any shortfall to the Offer. An indicative timetable for the Offer and the shareholder meeting is set out at the bottom of this announcement.
OFFER INDICATIVE TIMETABLE
An indicative timetable of key dates in relation to the Offer is detailed below.
| Event | Date |
|---|---|
| Announcement of Offer | Monday,18 May2020 |
| Prospectus lodged with ASIC | Thursday,28 May2020 |
| Despatch of Notice of Meetingto Shareholders | Friday,29 May2020 |
| Ex Date | Tuesday,2 June 2020 |
| Record Date(5:00pm WST) | Wednesday,3 June 2020 |
| Prospectus despatched to Eligible Shareholders and Offer opens |
Tuesday,9 June 2020 |
| ClosingDate(5:00pm WST) | Tuesday,23 June 2020 |
| Shareholder General Meeting | Monday,29 June 2020 |
| Issue Date | Tuesday,30 June 2020 |
| Despatch of holding statements and normal tradingof new shares on ASX commences |
Wednesday,1 July2020 |
The ASX announcement has been authorised for release by the Board of Vysarn Limited.
For further information:
James Clement Managing Director Vysarn Limited Telephone: +61 8 9486 7244 Email: [email protected]
Kyla Garic Company Secretary Vysarn Limited Telephone: +61 8 9486 7244 Email: [email protected]
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Forward looking statements : This announcement contains “forward-looking statements” and “forward-looking information”, including statements regarding our intent, belief or current expectations with respect to the Company’s business and operations, market conditions, results of operations and financial condition, and risk-management practices. Often, but not always, forward-looking information can be identified by the use of words such as “plans”, “expects”, “is expected”, “is expecting”, “budget”, ‘outlook”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, or “believes”, or variations (including negative variations) of such words and phrases, or state that certain actions, events or results “may”, “could”, “would”, “might”, or “will” be taken, occur or be achieved. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements. Such information is based on assumptions and judgments of management regarding future events and results. The purpose of forwardlooking information is to provide the audience with information about management’s expectations and plans. Forward-looking statements are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. This announcement contains statements relating to EBITDA for the full year to 30 June 2020 and rig utilisation for the June 2020 quarter. These statements are based on the Company’s existing contracts and anticipated revenue as well as other estimates and assumptions that, while considered reasonable by the Company, are inherently subject to significant uncertainties and contingencies, many of which are outside the control of the Company, involve known and unknown risks and uncertainties that could cause actual events or results to differ materially from estimated or anticipated events or results reflected in such forward looking statements on certain assumptions, which may prove to be incorrect. Actual results, performance, actions and developments of the Company may differ materially from those expressed or implied by the forward-looking statements in this announcement.
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