Covid 19 coronavirus: Vista Group to raise $65 million

Vista Group International is raising $65 million through a placement and rights issue to keep the company well-capitalised through the coronavirus crisis which has significantly impacted almost all its customers.

The cinema software company said directors, founders and senior management have committed to contribute $4.7 million and that the balance of the capital raising is fully underwritten by Macquarie Capital and Craigs Investment Partners.

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"The outbreak of covid-19, and the actions taken by governments in response, are having and will continue to have a substantial impact on Vista group and the global film industry more generally," said chair Kirk Senior in a statement.

"Almost all of our customers are significantly impacted by the restriction of movement and the duration of cinema closures is unpredictable," Senior said.

The equity raising follows previously announced measures to cut costs including deferring capital spending projects, cancelling this year's final dividend and cancelling the planned purchase of an additional 14.5 per cent of Vista China – Vista currently owns 47.5 per cent of Vista China.

Of the amount to be raised, $25 million will be via a placement to institutions and the other $40 million through a one-for-4.75 pro-rata accelerated entitlement with both offers priced at $1.05 per share and resulting in 61.9 million new shares.

Vista shares last traded at $1.40 and are in a trading halt while the placement is completed.

However, they have jumped from $1.01 last Thursday ahead of the Easter break to $1.16 on Tuesday this week, a gain of 38.6 per cent in two trading days.

The rights are non-renounceable, meaning they can't be traded and will lapse if not exercised. Retail shareholders can apply for additional new shares in excess of their entitlements up to a maximum of 40 per cent of their entitlements.

Vista said it has cash of $40 million at March 31, $31 million of debt and $23 million available headroom under its current debt facilities - $18 million of that has been specifically available to fund the company's conversion to a software-as-a-service model.

It will have about $125 million of liquidity after the capital raising. "Vista Group has engaged with and continues to be well supported by its debt provider" with all existing debt facilities maturing in January 2023. ASB Bank is the company's banker and has agreed to amend the group coverage ratio through to Dec. 31, 2021.

The company expects to have "sufficient liquidity to comply with its financial covenants through to Dec. 31, 2021 under downside scenarios" after the capital raising.

It said the impact of the crisis on Vista and the film industry globally has already been substantial – it is the world's largest supplier of technology used to run cinemas, market and distribute movies, claiming 51 per cent of cinemas with 20 or more screens.

Vista is "actively engaged with its customers to help support them through this difficult time. While Vista Group expects to continue booking recurring revenue, it is working with its customers to manage their payment schedules," it said.

Recurring revenue in calendar 2019 was $88.2 million, 61 per cent of total revenue.

"Notwithstanding this temporary period of uncertain economic outlook, Vista Group is well positioned for recovery when cinemas begin to reopen, being the largest provider of business-critical software and data analytics solutions to the global film industry."

- BusinessDesk