Technology group EOH on Friday informed its shareholders of its plan to go to them for cash in a bid to resolve its legacy debt issues.
EOH has been battling debt and has implemented a turnaround strategy to save the firm.
In a statement, EOH said its positive financial results reflected a major milestone in the successful execution of its turnaround strategy, and illustrated the significant progress made in addressing historical compliance, governance, and risk failings.
The group said with the turnaround of EOH’s compliance, governance and risk management were largely complete, and in the context of the significant improvement in EOH’s financial performance, the company’s board of directors considered it appropriate to focus on optimising EOH’s capital structure, and positioning the company for future growth by proceeding with an equity capital raise of up to R600 million.
"Notwithstanding significant progress to date, EOH’s deleveraging and liquidity objectives remain incomplete, with EOH continuing to be burdened by its debt commitments and interest obligations.
This necessitated the renegotiation of its debt funding package with its lender group, which was concluded on April 1, 2022," it said.
EOH said the terms of the refinancing agreements with lenders required it to undertake a capital raise to repay a significant portion of the bridge facility outstanding.
The bridge facility is repayable by December 2023.
According to EOH, the capital raising plan includes a renounceable rights offer of up to R500 million, or if the specific issue is not approved by EOH shareholders, up to R600 million. A specific issue of ordinary shares at the rights offer price for cash of R100 million to black empowerment partner Lebashe Investment Group, means Lebashe is partially underpinning the rights offer subject to certain terms and conditions.
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