Education, health and sport information publisher Electric Word is raising more cash to reduce debt and finance web development.
A placing at 1.5p a share will raise £1.3m and up to £500,000 more could be raised via a one-for-nine open offer at the same share price. An accelerated repayment of £250,000 of the £1.1m term loan has been negotiated with the company’s bank
If there is no take-up of the open offer then ISIS will increase its stake from 28.8% to 29.1%. Realistically ISIS will probably end up with a slightly lower stake. Nigel Wray will undoubtedly increase his stake. Prior to the open offer his stake will rise from 11.6% to 16.7%. The other main investor in the placing is Stewart Newton, whose stake will initially increase from 26.4% to 26.8%.
In the six months to May 2012, revenues were flat at £7.73m. There was a shift from print to online revenues. However, underlying profit fell by one-fifth to £422,000. Net debt was £1.7m at the end of May 2012.
Education revenues fell but it returned to profit, while the health division also made a profit after a small loss in the first half of last year. The sport and gaming division reported a fall in profit but it is still the largest profit contributor.
If the open offer is taken up in full, then the number of shares will have nearly trebled in the past three years. Previous share issued have held back earnings per share and the latest fundraising will do the same. Electric Word needs to show that the investment it is putting into the business will pay off.
At 1.62p a share, Electric Word is currently valued at £4.83m.
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