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Quickstep announces fully underwritten $22.0 million equity raising

News International-French

27 Oct 2015

Quickstep Holdings Limited is pleased to announce that it is undertaking a $22.0 million capital raising (the Equity Raising) lead managed and underwritten by Moelis Australia Advisory Pty Limited (Moelis).

The Equity Raising comprises:

  • a fully underwritten placement of 33,333,333 Shares to a new strategic investor at an issue price of $0.15 per Share to raise $5.0 million before costs (Placement); and
  • a fully underwritten pro‐rata non‐renounceable entitlement offer at an issue price of $0.13 per Share to raise approximately $17.0 million before costs on the basis of 1 new Share for every 3.3 existing Shares held on the Record Date of 4 November 2015 (Entitlement Offer).

Participants in the Placement will be eligible to participate in the Entitlement Offer.

The Placement issue price of $0.15 per share represents:

  • a 21.1% discount to Quickstep’s closing share price of $0.190 per Share on 23 October 2015, the trading day prior to Quickstep entering into a trading halt in connection with the Equity Raising; and
  • a 21.6% discount to the 15‐day volume weighted average price of Shares on ASX (up to and including 23 October 2015) (15‐day VWAP) of $0.191 per Share.

The Entitlement Offer issue price of $0.13 per Share represents:

  • a 31.6% discount to Quickstep’s closing share price of $0.190 per Share on 23 October 2015;
  • a 32.1% discount to the 15‐day VWAP of $0.191 per Share; and
  • a 25.1% discount to the theoretical ex‐rights price of $0.174 per Share.

The purpose of the Equity Raising is to:

  • fund capital expenditure associated with the forward C‐130J and JSF sales pipeline;
  • strengthen Quickstep's balance sheet by reducing short term debt by $5 million;
  • enable Quickstep's technology development program to be accelerated;
  • fund the set‐up of Quickstep's new Research & Development facility at Waurn Ponds; and
  • continue to commercialise the application of Quickstep's existing technologies in the Quickstep Automotive and Quickstep Aerospace divisions.

Washington H Soul Pattinson and Company, Quickstep’s largest shareholder, has confirmed its intention to subscribe for 100% of its entitlement under the Entitlement Offer and to sub‐underwrite up to $3 million of any shortfall under the Entitlement Offer. Also, Newmarket Capital has agreed to sub‐underwrite up to $6 million of any shortfall under the Entitlement Offer.

Deakin University, a long term partner in the development of Quickstep's patented technologies, has committed to become a strategic shareholder through the Placement. This is consistent with the University’s focus at their Waurn Ponds campus on new carbon related materials and processing technologies in partnership with industry.

The Directors of Quickstep have confirmed that they and their controlled entities will subscribe for 100% of their entitlements under the Entitlement Offer.

Quickstep’s Chairman, Tony Quick, said “We are delighted with the strong support the Equity Raising has received from a number of high quality strategic and institutional investors, including Washington H Soul Pattinson, Deakin University, Newmarket Capital and other key Australian small‐cap institutional investors. Having these supportive investors underpins Quickstep’s opportunity to become a global leader in advanced composites manufacturing solutions.”

Quickstep’s Chief Executive Officer, David Marino, said “The Equity Raising will allow Quickstep to pursue current growth opportunities across its divisions, accelerate the commercialisation of our patented Qure and RapidQure technologies and strengthen the Company’s balance sheet. It will further build on the positive momentum shown in our Q1 FY16 operational performance with the growth of the Company’s order book to in excess of $130 million on our C‐130J and JSF business, and the anticipated growth with the JSF vertical tail business and automotive contracts. We have been able to achieve this whilst delivering both positive operating cash and profitability in the period.”

Intention to appoint new Non‐Executive Director

Quickstep is also pleased to announce its intention to appoint James Douglas as a Non‐Executive Director of Quickstep, filling an existing casual vacancy. It is anticipated that Mr Douglas will be appointed prior to the December Board meeting.

Commenting on the new appointment, Chairman Tony Quick said “We are delighted that a person of Mr Douglas’ experience and capability will join Quickstep’s Board of Directors. Mr Douglas’ credentials and expertise particularly in the area of carbon fibre manufacturing and corporate finance will be beneficial to the Board and we look forward to working closely with Mr Douglas to achieve the Company’s goals and strategic direction.”

Mr Douglas is the current Chairman of Australian composite automotive wheels manufacturer Carbon Revolution and is a founder of Newmarket Capital. Mr Douglas has over 20 years of global investment banking experience and has held former roles as Global Head of Consumer Products at Merrill Lynch, Head of Consumer Products – Americas at UBS and Head of Global Banking Australia & New Zealand at Citi. Mr Douglas holds a B. Science & Law from the University of Melbourne.

Details of the Entitlement Offer

The Entitlement Offer is being extended to eligible Quickstep shareholders who meet all of the following criteria:

  • they are registered as a holder of Shares at 7.00pm AEDT on 4 November 2015 (Record Date);
  • they have a registered address in Australia or New Zealand;
  • they are not in the United States or a US Person or acting for the account or benefit of such persons; and
  • they are eligible under all applicable securities laws to receive an offer under the Entitlement Offer.

The Entitlement Offer is expected to open on 6 November 2015 and to close at 5.00pm AEDT on 24 November 2015. Shares issued pursuant to the Entitlement Offer are expected to commence trading on a deferred settlement basis on 25 November 2015 and will rank equally with existing Shares on issue.

The Entitlement Offer will include a top‐up facility under which eligible shareholders who take up their full entitlements will be invited to apply for additional Shares in the Entitlement Offer from a pool of those entitlements not taken up by other eligible shareholders (Top‐Up Facility). There is no guarantee that applicants under this Top‐Up Facility will receive all or any of the Shares they apply for under the Top‐Up Facility. If eligible shareholders do not take up their pro‐rata entitlements under the Entitlement Offer, it is anticipated that the shortfall will be allocated:

  • first, to eligible shareholders who apply to take up additional new Shares in accordance with the terms of
  • the Top‐Up Facility; and
  • second, to the underwriter and sub‐underwriters.

The Entitlement Offer is non‐renounceable. This means that Quickstep shareholders who do not take up their entitlement to participate in the Entitlement Offer will not be able to transfer or receive any value for those entitlements, and their equity interest in Quickstep will be diluted.