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Quickstep secures additional working capital funding

News International-French

4 Feb 2015

Quickstep Holdings, the manufacturer of high-grade carbon-fibre components for the aerospace and automotive industries, is pleased to announce that Newmarket Financing Management Pty Limited and associates (Newmarket), which has a track record of investing in carbon-fibre companies, has agreed to provide a $3 million debt facility to Quickstep.

The new facility provides short-term working capital support for Quickstep as it continues to ramp up production at its Bankstown Airport facility for aerospace manufacturing contracts.

Key aspects of the facility are:

  • Loan of up to $3 million
  • The facility must be drawn down in tranches of $1 million
  • Term 18 months
  • Interest rate of 12% payable monthly in arrears
  • The debt is secured, but subordinated to senior debt

The facility will support Quickstep’s strong growth as its deliveries for the F-35 Lightning II Joint Strike Fighter (JSF) and Lockheed Martin C-130J Super Hercules programs accelerate. Quickstep completed 188 JSF components in FY2014, increasing production to 200 parts delivered in the first half of FY2015. JSF production continues to ramp up. Production of C-130J ship-sets has expanded from seven ship-sets in FY2014 to 14 ship-sets in the first half of FY2015; and is expected to continue at an approximate rate of three ship-sets per month. Quickstep’s anticipated significant growth in manufacturing activity is on track and manufacturing sales are expected to grow from $12 million in FY2014 to more than $30 million in FY2015. As the programs build they will generate strong cash flow for Quickstep in subsequent years.

As partial consideration for providing the loan, Quickstep will issue 25 million options to Newmarket to acquire ordinary shares in Quickstep on the following basis:

  • The options grant the right to acquire a total of 25 million shares in Quickstep (i.e. one share per option)
  • The options will expire on 31 December 2018, with any unexercised options automatically lapsing after this date
  • The exercise price will be the lesser of $0.25 or 25% above the issue price of any equity capital raising up to $10 million undertaken prior to the exercise of that tranche of options
  • The options can be exercised at the discretion of the option holder at any time, other than during nominated blackout periods that relate to the release of Quickstep’s periodic ASX financial reports
  • The options must be exercised in tranches of not less than 2,000,000
  • The options will be unlisted.
  • Shares issued upon exercise of the options will rank pari passu to other ordinary shares of the company

The Option Deed governing the options to be issued by Quickstep to Newmarket also gives Newmarket the right, but not an obligation, to participate in any equity fundraising conducted by Quickstep within 18 months of the Completion Date of the Option Deed. Such participation would be at the same price as other participants in the raising.

Quickstep’s Executive Chairman, Tony Quick said, "We are pleased to secure this debt facility which will allow Quickstep to manage more effectively our increasing production capabilities. In the past six months, Quickstep has doubled sales compared to the previous full financial year; and the company has a firm order book valued at $56 million, with the majority of work to be completed in FY2015 and FY2016. In agreeing to the combined debt and option arrangement Newmarket has demonstrated confidence in Quickstep’s ability to deliver significant growth which will add to the market value of the company, noting that the pricing on the options is at a premium to Quickstep’s current share price and the 1 month, 6 month and 12 month volume weighted average prices (VWAPs). We welcome Newmarket as a business partner and look forward to strengthening our relationship with them.”