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Superloop raises AU$22m under first stage of entitlement offer

The institutional entitlement offer has raised just over AU$22 million for Superloop, ahead of the retail offering later this week, to fund its expansion across Asia.
Written by Corinne Reichert, Contributor

Asia-Pacific fibre infrastructure company Superloop has announced that it successfully raised AU$22.45 million under the first stage of its fully underwritten one-for-seven pro-rata accelerated entitlement offer of shares.

Under the institutional entitlement offer, Superloop will issue around 10.7 million new shares at AU$2.10 per share on June 29.

"The institutional entitlement offer received strong support and the shortfall ... was significantly oversubscribed by both existing institutional shareholders and new institutional investors," Superloop said.

"As a result of the successful completion of the institutional entitlement offer, Superloop shares will recommence normal trading on an ex entitlement basis from the opening of the market on 21 June 2016."

Superloop is hoping to raise a total of AU$35.3 million by offering 16,793,942 new shares at AU$2.10 per share. Eligible shareholders can subscribe for one new share per seven existing shares, with the offer including an institutional component and a retail component.

The institutional offer was open for the exercise of entitlement between June 17 and June 20, and will see shares issued on June 29, while Australian and New Zealand retail entitlements can be exercised between June 24 and July 12, and are expected to be issued on July 19.

"The funds raised from this entitlement offer will be used to fund investment in the Hong Kong TKO Express domestic submarine cable project; expansion of the HK fibre network beyond the initial network; expansion of the Singapore network (including but not limited to Project Red Lion); general working capital; and the costs of the entitlement offer," Superloop said in an announcement to the Australian Securities Exchange (ASX) last week.

In Australia, the company has 288 cores of fibre connecting 40 datacentres across Sydney, Melbourne, and Brisbane, while Superloop's Singaporean network now consists of 132km of fibre under Project Red Lion, eight datacentres, two cable landing stations, and 14 commercial enterprise buildings now connected of its target of 25 buildings.

Its 110km Hong Kong fibre-optic telecommunications network is due to be completed in December 2016, with two 1,000-core cables reaching 30 sites and datacentres initially. The Superloop (Hong Kong) subsidiary was granted a Unified Carrier Licence by the Hong Kong Office of the Communications Authority in August.

Superloop had announced in early December entering an agreement to construct and run the fibre-optic network in Hong Kong, to which it holds a 25-year indefeasible right of use, with two five-year options to extend.

It also announced plans to build TKO Express, a direct submarine cable-crossing path between the datacentre campuses of Tseung Kwan O (TKO) -- Hong Kong's new major hub for technology, datacentre, financial, and media companies, as well as submarine cable landing stations -- and Chai Wan.

At the end of last year, Superloop similarly raised AU$7.4 million through its share purchase plan (SPP) offer for the express purpose of building out its network in Hong Kong. During the SPP, it issued 3.9 million shares at AU$1.90 per share; prior to this, the company had raised AU$41.9 million through placement of 22,045,000 fully paid ordinary shares at AU$1.90 per share to professional and sophisticated investors.

In February, Superloop recorded a net loss of AU$3.98 million for the first half of the 2016 financial year on revenue of AU$1.94 million and earnings before interest, tax, depreciation, and amortisation (EBITDA) of negative AU$3.51 million.

Operating expenses amounted to AU$3.9 million, with AU$2 million of this arising from employee expenses and AU$1.1 million from professional services. Contributing to this was the company's acquisition of US broadcast media network Cinenet Systems for AU$3 million during the reporting period.

Partially due to this acquisition, Superloop's net assets totalled AU$100.9 million as of the end of December 2015, almost double the AU$53.8 million reported at the end of June 2015, while the company reported cash and cash equivalents of AU$35.1 million.

The fibre company has previously said that it expects to achieve revenue of AU$10 million by July.

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