Today, data collection group Appen [ASX:APX] has shared the closure of the institutional segment of its fully underwritten A$60 million equity raising, launched yesterday in support of its strategic refresh and chase to return to profitability.
The tech group said the proceeds will go into funding one-off costs associated with Appen’s cost reduction program. It will also add some flexibility to its balance sheet, with general working capital in support of profits and costs.
As is often the case so soon after an equity raising of this kind, the APX share price had taken an 8% slide in trading this morning, and shares were valued at $2.11 at the time of writing.
Understandably, there has been a drop in the last week. However, this was a hefty 34%, and in the longer term, the stock price has been deteriorating quite significantly over the course of the year:
Source: TradingView
Appen’s $60 million equity raising begins
Appen announced a successful fully underwritten institutional placement of new fully paid ordinary shares for its Institutional Entitlement Offer.
Appen said that its placement raised around $21.2 million at the offer price of $1.85 a share and noted that it had received significant demand from both existing and new shareholders.
This resulted in around 11.4 million new shares being issued.
Appen has agreed to issue about 4.8 million new shares for the raising of a further $8.8 million at the offer price. This has also received strong support from its eligible institutional shareholders and has a taken-up rate of about 95%.
Appen’s retail component of the Entitlement Offer is due to open on 23 May and runs until 6 June. This part of the offer will appeal to eligible retail shareholders in both Australia and NZ.
Retail shareholders will have the option to take up all or part of their entitlement, and eligible retail shareholders will also be invited to participate in the offer at the same price and offer ratio as the Institutional Entitlement Offer.
Appen CEO Armughan Ahmad commented:
‘Appen is delighted with the successful outcome of the Institutional Component of the Equity Raising and the support received from both existing and new institutional shareholders. We look forward to executing on the vision we have communicated to the market and delivering results for our shareholders.’
As outlined yesterday, these funds will go towards funding new processes, which consists of a new strategy it first presented last week in a trading update to diversify revenue and cut costs.
Appen said that should current conditions persist throughout the year, the initiatives should result in Appen exiting FY2023 with a return to underlying EBITDA and underlying cash EBITDA profitability on an annualised, run-rate basis.
The equity raising is expected to propel this return to profitability and will go towards backing new breakthroughs in AI, which — on the generative side — is a market that has been estimated to grow from $8 billion in 2021 to more than $110 billion by 2030.
Some other key areas of improvement included leadership, company refresh, operations, project delivery and a cost reduction program to strengthen sales and marketing functions.
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Regards,
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For Money Morning
