Energy optimisation and assurance services provider Inspired (LON: INSE) is improving its balance sheet via a placing raising £21.25m at 40p/share and a retail offer could raise up to £2m.
There is also an issue of £5m of 12% convertible loan notes, which are convertible at 80p/share. The shares come with warrants exercisable at 80p each.
Gresham House Asset Management and Regent Gas are supporting the fundraising and taking up all the convertible loan notes. Gresham House Asset Management is receiving a fee of 2.5% of the money raised in the placing and convertible issue. The directors are subscribing for £409,000 worth of shares.
Late in the year AIM-quoted Inspired won three large optimisation contracts with two starting in 2025. This is later than originally expected and increases working capital requirements. It meant that the 2024 pre-tax profit was downgraded by £5m to £12.3m.
Net debt was forecast at £58m at the end of 2024. Covenants for interest cover and leverage were recently changed, and this would ensure no breach following the decline in expected profit. The cash will not be received by the company before the end of the year – a general meeting will be held on 7 January – but Inspired will start 2025 with a much-reduced debt burden. The current revolving credit facility lasts until October 2026
The retail offer is to existing shareholders and closes at 4.30pm on Wednesday 18 December. The offer is through intermediaries listed at https://www.bookbuild.live/deals/W1LJ5Q/authorised-intermediaries.
The share price ended the day at 40p, and the announcement of the fundraising came after the close. Management argues that reducing the debt burden will help to encourage a re-rating for the shares.
There are currently 105 million shares in issue. Forecast 2025 earnings were 13.6p/share before the fundraising. This will be diluted by the issue of up to 58.1 million shares. Even so, the prospective multiple should still be in single figures.