RPM Automotive Group Ltd (ASX:RPM) has executed an agreement with Collins St Value Fund (CSVF) that will provide $8 million to support the company’s ambitious growth strategy.
CSVF has agreed to invest $2.5 million in RPM Automotive Group at 30 cents per share and provide a competitive 3-year $5.5 million unsecured convertible note.
RPM plans to use these funds to progress its pipeline of large scale, EPS accretive acquisitions.
“Growth via strategic acquisitions”
RPM co-founder and managing director Clive Finkelstein said: “Over the next 12 months RPM intends to continue its strategy of growth via strategic acquisitions.
“This funding package has been set on attractive terms to our shareholders and provides RPM with the capital necessary to take advantage of attractive M&A opportunities while introducing a well-respected institutional investor onto our register.”
Funding to support growth plan
This agreement puts RPM in a strong financial position to support its current growth plans without the need to raise additional capital from the market.
The company believes its forward-looking EBITDA should increase by at least $3 million per annum, once it utilises and deploys the $8 million raised from CSVF in conjunction with additional funds from bank financing.
Funding details
RPM has executed an agreement with CSVF for issuing its shares at a price of 30 cents per share, a slight premium to the current share price, to raise $2,500,000.
Besides this, CSVF has also agreed to provide a $5,500,000 worth convertible notes (CN), which is subject to shareholder approval for the conversion of the CN and will be sought at a general meeting to be convened for this purpose.
The CN is convertible at 35 cents per share by CSVF at any time over the term of the CN.
Moreover, the CN is convertible at 35 cents per share by RPM at its discretion if RPM’s share price trades at $0.50 or higher for 30 consecutive days.
The CN pays a coupon rate of 3.5% pa quarterly in arrears in cash or shares, issued at the 30-day VWAP, at the company’s discretion.
“Thrilled to have identified and invested in RPM”
CSVF founder and chief Investment officer Vasilios Piperoglou said: “As a concentrated fund we don’t back many teams.
“RPM has proven that they possess the right entrepreneurial management team and maintain a sustainable and scalable business model.
“Especially in today’s markets, we are thrilled to have identified and invested in RPM, a company that offers a great growth strategy, and appears to offer clear value.”