Seek taps market for cashMiriam Steffens April 23, 2009 - 1:13PM The James Packer-backed job classifieds site Seek is tapping the market to raise more than $100 million to fund acquisitions for its education and training businesses as employment demand is floundering.
The company is looking to place 38.5 million shares at $2.60 apiece, an 11.9% discount to its latest closing price, with investors including Mr Packer's Consolidated Media Holdings and its two chief executives, Paul and Andrew Bassat. The trio plans to stump up about a third of the $100 million raising, with Consolidated Media paying $26.7 million to maintain its 27% stake.
There will be also a share purchase plan for existing shareholders to buy parcels of up to $5000, and a top-up offer to investors who would otherwise get diluted by the raising.
Seek plans to use the majority of the proceeds to buy the 50% it doesn't yet hold in the education group, Think, which owns a group of private colleges across several campuses in Australia. It has agreed to spend $42.5 million to take control of the business, and pay down Think's $14.5 million in borrowings.
The company has also offered to buy as much as 10% more in IDP, its joint venture run with a group of Australian universities that recruits international students and conducts English-language tests. Seek paid $35.9 million for its original half-stake in IDP in 2006.
Both acquisitions would start modestly adding to Seek's earnings-per-share from 2009-10, Andrew Bassat said.
The rest of the money raised would be used to partly pay down rgw company's $152 million in debt.
Seek's shares went into trading halt this morning as Macquarie Group started approaching investors to place the shares.
The push to shore up Seek's education business comes as the downturn in the economy has brought the company's double-digit profit growth to a sudden halt.
The company has warned of a tougher June half, slashing its dividend payout ratio from 70% to 40% and forecasting that operating earnings would fall 15% to $93.5 million in 2008-09 after a 37% jump the year before.
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)