As highlighted originally in the initiation research, Dicker Data (Dicker) planned to complete an equity raising in the second half of the year to increase the free float in the company and improve its leverage
Dicker has now completed this action and has raised a total of $45.5m issuing 23m in new shares while the company founders sold down 6m shares ($10.5m).
Public ownership of the company has now risen from around 10% to 30% and net assets have increased from $29m to $73m. If the full amount is applied to reduce debt as intended, adjusted annualised 1H15 net debt/EBITDA will fall from approximately 3.3x to 2.3x. All of these elements are credit positive.
At the time of writing, Dicker’s BBSW+4.40% March 2020 floating rate note is priced indicatively at around 400bps over and appears attractive value given the company has performed strongly and the equity raise has improved credit metrics.
Please see the following link for details on the company’s recent 1H15 results: http://thewire.fiig.com.au/article/research/company%20updates/2015/07/22/dicker-data-1h15