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14 November 2006
$6M CAPITAL RAISING
PERTH, AUSTRALIA:
Placement and Share Purchase Plan
Orbital Corporation Limited ("Orbital" or "Company") advises that it has successfully raised $4.0 million through a placement of approximately 26.6 million shares at an issue price of $0.15 per share. The Company will also make an offer under a Share Purchase Plan (“SPP”) so that all its shareholders resident in Australia and New Zealand are entitled to purchase up to $5,000 worth of ordinary shares in the Company at the $0.15 per share placement price. If fully subscribed, the SPP will raise a further $2.0 million.
Shareholder approval is not required to complete this capital raising and will not be sought by the Company.
Patersons Securities Ltd acted as Lead Manager to the share placement which was well supported by existing shareholders and new investors. Patersons Securities Ltd has also fully underwritten the SPP.
Reason for capital raising
The purpose of the capital raising is to support the growth of the business. As discussed at the Company’s recent AGM, Orbital commenced the financial year with a healthy order book for engineering services, with additional orders since June continuing to be robust. In line with the Company's last shareholder communications in October, we have seen a strong increase in engineering services revenue in the first quarter and we anticipate this will continue for the second quarter providing confidence for an improved full year result from this business segment. Also, in September 2006, Orbital agreed to pay $500k to settle in full a legal dispute with Coles Myer. These conditions have increased the working capital requirements beyond our earlier estimates.
In addition, Orbital anticipates opportunities to expand the size and scope of the business including for example larger scale engineering programs and strategic alliances. Following the capital raising, the Company will have a more appropriate level of working capital and will be able to better pursue these opportunities and ensure we can be more proactive in pursuing growth.
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