Car parts retailer Bapcor will raise $210 million in fresh capital from investors to help slash its debt and prepare for a quick "bounce back" to normality when millions of Australians rush to tune their undriven cars once coronavirus restrictions are lifted.
The ASX-listed retailer placed its shares in a trading halt on Thursday morning to announce the raise, which will consist of a fully underwritten $180 million pro-rata institutional placement and a $30 million non-underwritten share purchase plan.
CEO of car parts group Bapcor, Darryl Abotomey says his company is still in a strong position despite the virus.Credit:Paul Harris
Proceeds will be funnelled directly towards Bapcor's balance sheet to slice its $429 million debt pile in half and reduce its gearing ratio, though chief executive Darryl Abotomey flagged it would also allow the company to make opportunistic acquisitions if any arose.
"We believe that there will be some businesses that may be distressed or who just want to get out which we could pick up," he told The Age and Sydney Morning Herald.
"We're not necessarily talking big businesses…but if [opportunities] come up we want to be able to continue to expand our network."
Bapcor runs around 950 retail and trade locations across Australia, New Zealand and Thailand under the Autobarn, Burson and Autopro brands, along with a specialist car parts wholesale division.
Investors will be offered shares at $4.40, an 8.5 per cent discount to Bapcor's last trading price of $4.81. A total of 40.9 million new shares will be issued, or 14.3 per cent of the company's existing capital.
The retailer is the latest Australian company to seek a cash injection from investors to help it through the virus crisis, with major names including Cochlear, Kathmandu, Flight Centre and Reece all raising millions in recent weeks.
The raise will hedge the business against any pressures which could arise during a potential six to twelve-month lockdown. Mr Abotomey expects a resurgence in business once stay at home restrictions are lifted.
"We've got absolutely no doubt once restrictions are lifted, this will bounce back really quickly," he said. "Most people would know if you leave your vehicle sitting there for months and then you try to use it, something's going to go wrong."
This will drive more customers into Bapcor-supplied mechanics for services, providing a much-needed boost in trade for the company which saw a sharp 11 to 15 per cent drop in sales across its divisions in the early weeks of April.
Revenue for the financial year up until February had been growing at 12.7 per cent compared to last year, and looking ahead Mr Abotomey was confident his business would continue to prosper, even after a record plunge in new car sales for March.
"We saw this through the GFC: as there's a downturn in new car sales, people then get their cars serviced more often. That's good for us," he said.
Regardless, Bapcor has still implemented a number of cashflow-preserving measures, including reducing executive salaries, seeking rent relief from landlords, extending payment terms with suppliers and requesting staff to take annual leave.
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