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Super Retail Group (ASX: SUL), the parent company of retailers including Supercheap Auto, Macpac, BCF and Rebel Sport, will raise $203 million to take advantage of current market conditions.
The raise follows a sales rebound in May with group sales increasing by 26.5 per cent, compared to a 26.2 per cent decline in April.
The underwritten entitlement offer will raise $203 million at a fixed price of $7.19 per share, representing a 7 per cent discount to the theoretical ex-rights price of $7.73.
SUL says the equity raising will allow the company to continue to execute its strategy and pursue growth initiatives.
Further, the company says the funds will enable SUL to take advantage of changing consumer trends by returning capital expenditure to historic records of approximately $90 million per annum.
The retailer says it will invest the funds in an omni-retail digital customer experience, supply chain, further simplification of its business model, working capital, and market consolidation opportunities presented as a result of COVID-19 disruption.
Approximately 28.2 million new fully paid ordinary shares will be issued, representing approximately 14.3 per cent of SUL's existing shares on issue.
Non-executive director and founder of Super Retail Group, Reg Rowe, has committed to take up his full entitlement, representing a subscription of $59.2 million of new shares in the offer.
"I fully support Super Retail Group's Equity Raising announced today," says Rowe.
"Combined with other initiatives announced, it will allow the Group to continue executing its growth agenda, invest in its market leading brands, further differentiate its proposition and provide additional flexibility in an uncertain environment.
"I am pleased to confirm that I will be participating in the Offer via SCA and SCCASP and remain committed to my shareholding in the long-term."
Reg founded Supercheap Auto with his wife Hazel in 1972 as an automotive accessories mail order business and opened its first retail location in Brisbane two years later.
Over the coming decades the company grew its physical retail portfolio, before listing on the Australian Stock Exchange in 2004.
In addition to announcing the $203 million SUL has also provided the ASX with a training update, demonstrating how the company has bounced back from a COVID-19 sales dive.
Following a decline of sales in April SUL group sales rebounded by 26.5 per cent in May, led by the Supercheap Auto, Rebel and BCF brands.
The company says Macpac was impacted by the New Zealand government-imposed COVID-19 restrictions. Over the period of time between 22 March to 23 May sales at Macpac were down 38.8 per cent.
The retailer also witnessed a strong shift to online sales in April and May, with group online sales increasing by 126.2 per cent to represent 18.2 per cent of group sales over that period of time.
SUL says group sales have continued to benefit from a strong consumer environment in June.
"We are very pleased with the robust trading performance of the Group despite COVID-19 and thank our team members for their dedication to the business during the pandemic," says SUL CEO and group managing director Anthony Heraghty.
"The execution of our strategy has continued during COVID-19, with our four core brands well positioned to take advantage of shifts in consumer behaviour that have been observed through the pandemic.
"The equity raising enables us to continue the execution of our strategy, further strengthen our omni-retail capabilities and continue to organically grow our four core brands."
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