AWF raises capital to pursue growth opportunities

AWF Group founder and director Simon Hull says the company wants to be able to chase options as they arise. Photo / Dean Purcell

AWF Group says a $14 million capital raising will reduce debt and help the contract labour and recruitment operator pursue growth opportunities, including potential acquisitions.

The Auckland-based company yesterday announced a rights issue through which existing shareholders will be able to buy one new share for every four they own at $2.10 each, a 16 per cent discount to Friday's closing price.

The offer, which is fully underwritten by investment bank Deutsche Craigs, opens on March 11 and closes on March 26.

AWF plans to use the funds raised to pay down bank debt that resulted from the company's $36 million acquisition of recruitment firm Madison, which was completed in December 2013.

Chairman Ross Keenan said the company's net debt was roughly $29 million and would reduce to about $15 million after the capital raising.

"We also have an internal debt reduction programme under way, which will further reduce that [debt] by the end of March," Keenan said.

The Madison acquisition diversified AWF's business away from its core contract labour operations into the white collar recruitment sector.

Founder and director Simon Hull said the company could "chip away" at its debt over time, but wanted to be in a position where it could immediately chase opportunities as they arise.

"We don't want to be hamstrung should the right thing come along that we want to become involved in," he said, adding that could involve both organic growth and acquisitions.

The company also announced yesterday that Madison boss Simon Bennett will become group chief executive in July, replacing Mike Huddleston, who is retiring after seven years at the firm's helm.

AWF last month said revenue for the year to March 31 was anticipated to be in the range of $196 million to $198 million, while net profit was expected to exceed $5 million, which would be an increase of about 31 per cent on the previous year.

The company's shares closed down 10c yesterday at $2.40.