RPM Automotive Group Limited has received $4 million in commitments from investors via a two-tranche share placement at an issue price of $0.072.
Funds will be used to develop its strategic tyre recycling program and improve RPM’s capital structure by strengthening its balance sheet by partially repaying a Collins Street Value Fund convertible note issued as part of the Company’s 2021 acquisition strategy.
“RPM has made significant progress in its acquisition strategy since 2021, expanding our national footprint and growing the Company to where it is today, which was made possible due to the continued support of investors and funding received from Collins Street Value Fund,” says RPM Automotive chief executive Guy Nicholls.
“RPM is now entering its next phase of growth. With the benefit of scale, The RPM team is now focused on driving margin expansion across our network. The capital raising strengthens our balance sheet and allows us to develop our tyre recycling initiative. It also builds our institutional shareholder profile.”
“RPM is ideally placed to take advantage of the regulatory tailwinds supporting tyre recycling. Each year, 56 million tyres are scrapped in Australia, with only a small proportion recycled. We will access our existing distribution network and customer base to create recycled rubber-based products for use in multiple sectors, which could ultimately see us collecting and annually recycling 54,000 tonnes of scrap tyres within
five years,” he says.
Details of the placement
Under the placement, RPM will issue approximately 55.7 million new shares to placement participants for $0.072 per new share to raise $4.0 million (before costs). The Placement issue price represents a 15.3% discount to the last closing price of $0.085.
RPM will also issue one new option for every new share issued to placement participants. RPM will apply to ASX to quote the new options.
The new options will have an exercise price of $0.10 and expire on August 31, 2025. The new options will be offered only to placement participants under a prospectus to be lodged. The terms of the latest options will be outlined in the prospectus.
The placement will be undertaken in two tranches. Under the first tranche, 48.5 million new shares will be issued on or around Wednesday, April 24, 2024. This will utilise RPM’s existing capacity under ASX Listing Rules 7.1 and 7.1A.
Under the second tranche, a further 7.2 million new shares will be issued and 55.7 million new options (i.e., the free attaching options in connection with both tranches of the placement). The issue of new shares and new options under the second tranche of the placement will be subject to shareholder approval, sought to be obtained at a general meeting of shareholders in late May 2024.
The second tranche of New Shares and all the New Options are expected to be issued on or around Friday, 31 May 2024. RPM is applying to have the New Options quoted on ASX at the time of their issue.
Bell Potter Securities Limited was the placement’s sole lead manager and book-runner.
