Defence, communications and space manufacturer Electro Optic Systems has bolstered its capital position with a new raising from shareholders at the same time refocusing the business on its profitable defence businesses.
The Canberra company, currently conducting a strategic review of its diverse and capital-hungry businesses, successfully raised $15 million in a placement with institutions and announced plans for a $2 million share purchase plan open to Australian and New Zealand shareholders who are not acting for US-based interests.
The placement took place at $1.20 a share, and by mid-morning EOS’s shares were down three per cent to $1.10.
EOS said the capital will be applied to working capital and near-term capital requirements.
EOS told investors: “The company intends to prioritise capital into the core defence business.”
The raising comes as EOS is conducting a review of strategy and funding options with a view to maximise shareholder value.
In line with other technology stocks, EOS share value has been battered this year, falling from a high of $3.29 in March to today’s placement which was made at $1.20 a share, a 22 per cent discount on the last traded price.
By mid-morning EOS’s shares were down three per cent to $1.10.
EOS faces massive demand on capital with its planned SpaceLink satellite relay network which aims to provide continuous, real-time data connectivity to satellites and other spacecraft in near Earth orbit.
EOS said today that SpaceLink had an estimated capital requirement of US$280 million, with a minimum Au$85 million required to progress the business to its next milestone.
Australia’s Export Finance Australia has issues a non-binding US$80 million letter of support for SpaceLink.
“The company is seeking to optimise the underlying value of SpaceLink whilst continuing to support and prioritise the profitable defence business.
“…The strategic review is actively exploring strategic options for SpaceLink, including investment by financial or strategic investors directly into the SpaceLink subsidiary.”
Picture: Electro Optic Systems
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