Audinate Group Ltd (ASX: AD8) shares are in a trading halt this morning after the media technology company announced a $40 million equity raising. Funds are earmarked to accelerate growth and strengthen the company’s balance sheet. The additional capital will also provide flexibility to pursue acquisitions that complement Audinate’s medium-term objectives.
What does Audinate do?
Audinate is a leading provider of professional digital audio networking technologies. The company’s Dante platform distributes audio signals over computer networks, with networked digital capability replacing analog cabling. Software based audio-visual (AV) systems are replacing hardware systems, transforming the AV industry. Dante is an ‘AV Application Stack’ comprising software, hardware, and products such as microphones, speakers, and cameras. Audinate’s technology has been used by Sydney Trains, The Super Bowl, and Wembley Stadium.
What are the details of the capital raising?
Audinate is seeking to raise $28 million via a placement to institutional and sophisticated investors at $5.15 per share. This will result in the issue of around 5.4 million new shares representing approximately 8% of Audinate’s existing issued share capital. The placement price of $5.15 represents a 9.5% discount to the last traded price.
A share purchase plan is being offered to raise up to an additional $12 million. Funds will be used to accelerate growth opportunities, strengthen Audinate’s leadership position in the AV industry, and develop its video capabilities. Audinate will increase investment in engineering, R&D capabilities, and business infrastructure as well as accelerating investment in additional video and software products. The funds will also shore up the balance sheet in the uncertain COVID-19 period and provide flexibility to pursue potential M&A opportunities.
How has the Audinate share price been performing?
The Audinate share price dropped to a low of $2.51 in March. It has, however, since gained 127% and was trading at $5.69 before the trading halt was called. Despite the recovery in the Audinate share price since March, it is still well below its 2020 high of $9. Over the 12 months to 30 June, Audinate reported unaudited revenue of US$20.4 million. Cash on hand at 30 June was A$29.3 million.
Audinate CEO, Aidan Williams, commented “Whilst we have faced headwinds associated with COVID-19 and recovery timing is uncertain, our confidence in the strength of our technology and business model remains high. Delivering our medium-term strategic priorities will ensure that Audinate is well placed to benefit from economic recovery as it occurs in our markets around the world.”
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Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AUDINATEGL FPO. The Motley Fool Australia has recommended AUDINATEGL FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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