Photon Group formally begins recapitalisation
Debt-laden Photon Group has moved to the next stage of its do-or-die fundraising effort, announcing its proposals for recapitalisation.
The company – which owns some of Australia’s best know communicatiosn agencies – said that it was looking to raise $102.5m at 10c a share. The last time that Photon’s shares traded on the ASX they were worth $1.02 per share.
Photon hit trouble after revealing that it would struggle to meet its deferred obligations to owners of the agencies it had bought. Photon’s portolio includes the likes of BMF, BWM, Frank PR and Naked Communications. it has since renegotiated the terms of most of those payments.
In its announcement to the ASX, the company also revealed that more than 10% of its fundraising will have to be spent on costs incurred organising the recapitalisation. It said:
so at 10c a share and a figure of $102.5m they have to sell at least 1,020,000,000 shares…. i might buy 100 so that just leaves 1,019,999,900
A big sigh of relief all ’round, I expect. Good on the team who pulled it all together.
Its a band-Aid, Photon has no chance of survival … more fool the new investors
Bob, a Band-Aid isn’t necessarily a bad thing. JP now has breathing space to put in a strong executive team, cut the non-performing companies and chart a steady as she goes 2011 before planning a share buy back to strengthen earnings per share.
It’s all text book stuff: as long as people at Photon do their jobs, earn their keep, and Photon doesn’t try to build any new businesses in the medium-term, it can come good again.
Organic growth. It ain’t a bad thing.
how can Photon possibly contemplate a share buyback….?! The business is still leveraged to the hilt, all cash flow will go to paying down debt and paying the earnouts and there is a prohibition on dividends to June 2012 or even 2018 if the debt hasn’t been paid down… they have said in the prospectus that acquisitions are off the agenda, so retaining the business and people they have looks like the only chance of survival.