EOH is planning to raise up to R600 million through a R500 million rights issue and an additional R100 million BBBEE deal.
The proceeds will be used to settle most of the bridge facility, and EOH believes it will leave it with a sustainable capital structure.
EOH decreased its debt from R2 billion at the end of January 2022 to R1.3 billion at the end of the financial year.
It was further reduced to R1.2 billion post-year-end as a result of the conclusion of major asset disposals.
Following negotiations with lenders, EOH refinanced the existing R1.9 billion debt into a R1.4 billion senior bridge facility and a R500 million three-year senior term loan.
The R1.4 billion bridge facility was initially repayable on or before 1 April 2023, but the deadline was subsequently extended to 31 December 2023. The R500 million loan is due on 1 April 2025.
Proceeds from the sale of Sybrin and the Information Services Group reduced the senior bridge facility to R832 million.
The proceeds from the sale of Network Solutions and Hymax SA post year end reduced the senior bridge facility by a further R104 million to R728 million.
“Over time, we believe the business should achieve a sustainable gearing level of c.1.0x to 1.5x net debt/adjusted EBITDA,” EOH said.
This announcement was made as part of EOH’s financial results release for the year ended 31 July 2022.
The group’s revenue declined from R6.5 billion to R6.0 billion, but it was still able to increase operating profit by 92% to R282 million.
EOH’s loss for the year improved from R280 million in 2021 to R18 million in 2022. It equated to a 91% improvement in total loss per share to 15 cents for 2022 compared to 166 cents for 2021.
EOH CEO Stephen van Coller said following a turnaround period, the company is now efficiently streamlined and profitable to allow for growth.
Van Coller was referring to fixing the company’s image and financial challenges following years of bribery and corruption.
EOH became the poster child of state capture in the corporate sector and featured prominently in the Judicial Commission of Inquiry into State Capture.
After corruption at EOH emerged, its share price plummeted from a peaked of over R172.00 to below R3.00 per share.
The share is currently trading at R4.40 per share, down 36% year-to-date.