Qube announces $500M entitlement offer

Transport and logistics company, Qube, is launching a $500 million fully underwritten 1 for 6.35 accelerated non-renounceable entitlement offer at $1.95 per share to provide additional balance sheet flexibility to pursue growth opportunities.

“Despite the near term challenges of COVID-19, our diversified business remains resilient and our long term strategic growth priorities remain unchanged,” said Qube Managing Director, Maurice James.

“Qube has a long track record of investing across its core business, including through acquisitions to diversify its capabilities and operations and provide a platform for long term earnings growth.

“We maintain a significant pipeline of organic and inorganic opportunities, and only expect this to increase in the current environment,” he said.

James said the entitlement offer will leave the business “conservatively geared, with significant balance sheet flexibility and liquidity to continue to pursue this robust growth agenda”.

Qube, as of 31 March 2020, had liquidity (cash and undrawn facilities) of $470 million after adjusting for the FY20 interim dividend, with no near term debt maturities, and material headroom to its covenants. Qube is also in advanced stages of finalising commitments with existing lenders for $200 million in additional facilities. In combination, with the entitlement offer, these initiatives will reportedly provide Qube with over $1,150 million of total liquidity.

This liquidity will support funding of the anticipated ~$420 million of minimum expected capital expenditure over the period from April 2020 to June 2021, including: maintenance capex; capex to support Bluescope, Shell, BHP Nickel West contracts and new equipment to support growth and productivity across the Operating Division; completion of additional warehousing at Moorebank Precinct East; and land preparation and precinct infrastructure works at Moorebank Precinct West to support the potential major new tenant and progression of the IMEX automation.

The entitlement offer, according to Qube, will also support additional growth opportunities across the business, including new contracts and projects across the Operating Division, strategic acquisition opportunities and potential accelerated warehousing development at the Moorebank Logistics Park expected to be driven by the finalisation of the agreement with the potential major new tenant.

Qube also continues to win new business and expand the scope of services provided to existing customers within the Operating Division.

In FY20, Qube has undertaken capex to support several attractive new growth contracts, such as:

  • BlueScope Steel Limited to provide East Coast interstate steel train services and intermodal terminal operations at Qube's North Dynon facility in Melbourne.
  • Shell Australia to provide supply base management, as well as various other logistics services.
  • BHP Nickel West which includes the construction and maintenance of a haul road and the provision of nickel ore haulage services.

In addition, Qube continues its strong track record of delivering growth in its core businesses and through acquisitions and is delivering synergies and operational benefits from recent transactions, including:

  • The acquisition of the remaining 52.8% interest in Quattro Grain JV Qube did not previously own.
  • The acquisition of New Zealand based NFA Holdings, which will provide Qube with additional geographic diversification, increased scale in its forestry operations and adds capabilities and equipment.
  • The acquisition of Chalmers to further develop Qube's logistics business in both Victoria and Queensland.
  • The acquisition of LCR Group, which provides Qube with the ability to deliver enhanced mining and industrial services to its existing and future customers.

In other news, Qube launched a renewables business unit.

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