US multinational pizza chain Domino’s Pizza Enterprises [ASX:DMP] entered a market halt earlier today at its own request in preparation for a fully underwritten institutional placement of $150 million.
The fast food chain is also to include a non-underwritten share purchase plan (SPP) to raise a further $15 million.
Altogether the Pizza enterprise has begun an equity capital raising for a total of $165 million.
DMP’s stock price, prior to the trading halt, was trading at a 47% devaluation over the last 12 months. DMP has been trading down 32% in its industry over that time.
Source: tradingview.com
Dominos’ Capital Equity Raising is launched
The popular pizza chain entered a trading halt in preparation for an equity raising of $165 million.
Said equity raise is to be achieved through both a fully underwritten institutional placement, totalling $150 million, and another $15 million as a non-underwritten share purchase plan (SPP).
The purpose being to raise funds to purchase all shares held by DPG (its UK and European subsidiary) for the company’s German joint venture.
Dominos said further funds from its SPP will be put to paying off debts.
The franchise reassured investors that capital-raising shares will be of equal rank to existing issued company shares.
As at 30 June, the company’s net debt was chalked up to $635 million, post-Malaysia, Singapore, and Cambodia acquisitions.
The company expects the purchase and payment options to take place in the first half of the calendar year 2023 and reiterated certain mechanisms for option pricing have been implemented under the joint venture agreement.
As for pricing, the company expects to work through the share prices through a bookbuild today, subject to an underwritten floor price of $65.05 for each new share, a discount of 2.0% to the company’s closing price yesterday.
The SPP will be available for eligible shareholders to apply for new shares at a lower end of the final price achieved under institutional placement and at a 2% discount to the closing price of the SPP offer period (22 December).
As it stands, eligible shareholders will have the option to apply for up to $30,000 worth of new shares.
Morgan Stanley has been selected as the lead manager and underwriter for the placement. Aperture Capital Partners is acting as the company’s corporate adviser, and Thomson Geer is the legal adviser.
Group CEO of Dominos, Don Meij, expressed his thoughts with the following statement:
‘We are excited about increasing our ownership in Domino’s Pizza Germany, which has been an objective of ours since entering the market. Germany offers strong long-term growth prospects for our business.’
Dominos’ AGM guidance is echoed
The company reflected on its trading outlook for the remainder of the 2023 financial year and remains in agreeance with the guidance provided to markets at the company’s AGM on 2 November.
At the AGM, Dominos revealed a 4.6% increase in net sales in FY22, an increase of 4.4% in online sales, and yet the company’s underlying EBIT was down by 10.5%.
For its FY23 trading update, sales were down 1.8%, and same-store sales were also down by 1%.
Dominos stated its business is tracking ‘to plan’ with Malaysian, Singaporean, and Cambodian markets also performing within the company’s expectations.
Although Dominos did warn of continuing inflationary headwinds continuing into the 2023 calendar year, this was unsurprisingly relating to energy prices and labour costs, which will undoubtedly play a large role in upcoming performance — especially given an increased presence in Europe.
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Regards,
Mahlia Stewart,
For Money Morning
