Bapcor Limited, strong and resilient business

Team Veye | 22 May 2020 ASX - BAP
Bapcor Limited, strong and resilient business

Bapcor Limited (ASX: BAP)

Share Purchase Plan Completion

Bapcor Limited (ASX: BAP) (“Bapcor” or the “Company”) on 20 May 2020announce the successful completion of its Share Purchase Plan (“SPP”) which follows the successful $180m underwritten institutional placement, completed on 17 April 2020.

Valid applications totalling approximately $122 million were received from registered shareholders for the SPP.

Given the strong support shown by eligible shareholders for the SPP, the Directors exercised their discretion under the terms of the SPP to increase the size of the SPP offer to $56 million (a $26 million increase from the original target of $30 million)

(Chart source: TradingView)

As disclosed in the terms and conditions in the Share Purchase Plan Booklet, Bapcor intends to exercise its discretion to scale back applications. Consistent with a pro rata methodology used for the institutional placement, Bapcor intends to allocate shares based on 50% of shares held at the record date of eligible shareholders who applied for new fully paid ordinary shares (“New Shares”) in the SPP, subject to the following: 

  • If an eligible shareholder applied for a value of Bapcor shares less than their pro rata amount, then they receive the value of Bapcor shares that they applied for 
  • A maximum value of $30,000 New Shares and a minimum value of $1,000 New Shares will be allotted 
  • If the scale back produces a fractional number, the number of New Shares allocated will be rounded up to the next whole number of New Shares (provided enough application money is available to pay for all the New Share) (Data Source – Company Reports)

 

Veye’s Take

Bapcor performed strongly across January and February 2020 with YTD revenue to the end of February +12.7% vs. PCP. The trading performance in March was below expectations with revenue growth of 11.5% vs. PCP reflecting Australian segments performing solidly but Bapcor New Zealand was materially impacted by COVID-19 disruptions. Trading conditions in both Australia and New Zealand deteriorated in the last week of March and into April as the COVID-19 disruptions impacted Bapcor’s businesses. Bapcor provides an essential service for the community in ensuring that replacement and service parts are available for cars and trucks. The institutional Placement will reduce Bapcor’s Pro-forma net debt to EBITDA ratio at 31 Dec 2019 to 1.3x. The success of the Placement is a clear endorsement of Bapcor’s strong and resilient business and its strengthened position to continue to execute its 5 year strategy and any other growth initiatives that may arise. Since the fall that occurred in end-March, the stock has not looked back. It is showing bullishness on both daily and long term charts. If it manages to cross $6.45 with volumes then it can have the potential to reach earlier highs. Veye recommends a "Hold" on “Bapcor Limited” at the current price of $5.91

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