Austal raises $200 million to expand US naval shipbuilding capacity

Australian shipbuilder Austal announced a A$200 million institutional placement on Monday to fund expansion of its Alabama shipyard, positioning the company for growth in US defence contracts.

The capital raising will partly finance the Final Assembly 2 (FA2) infrastructure project at Austal’s Mobile facility, a strategic site for the US Navy. The expansion includes a new assembly building, waterfront improvements and ship lift system to enable delivery of large steel vessels for the US Navy and Coast Guard.

“This announced raise will ensure that Austal is appropriately funded for FA2, which once complete, will facilitate the delivery of large steel vessels in the current pipeline for the US Navy and ensure Mobile continues to be well placed to execute on future opportunities,” said Austal Chief Executive Officer Patrick Gregg.

The total capital investment for FA2 is estimated at US$300 million, to be phased over fiscal years 2025-2027. Funding will come from the equity raising and new debt facilities, with an Australian Government financing agency providing support for approximately 50 per cent of the required financing.

Austal reconfirmed its earnings guidance for FY25 of not less than A$80 million EBIT and highlighted its record order book of A$14.2 billion, with further growth expected through the proposed Strategic Shipbuilding Agreement with the Australian government.

The placement will issue up to 52.6 million new shares at A$3.80 per share, representing a 15.6 per cent discount to Austal’s closing price on 10 March. The company’s largest shareholder, Tattarang, is supporting the placement up to its full pro rata allocation.

FA2 is expected to be operational in FY26 and completed in FY27.

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