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Singapore “Flyer” of the Week: AusGroup Limited

ausgroup_logo This week’s instalment features AusGroup Limited (SGX: 5GJ). The company flew 32.3% so far this week, closing at $0.25 on Monday.

The firm is involved in the marine and offshore drilling sector. The main business of the company is to provide subcontract services to the oilfield equipment manufacturing companies in the South East Asia region, through its fabrication and machining facility located in our shores.

This week, on Monday, AusGroup made public that it had entered into a conditional placement agreement with DBS Bank Limited (SGX: D05) to strengthen its financial standing. It will place an aggregate of 96,100,000 new ordinary shares at an issue price of S$0.168 per share. This is at a discount of 8.5% from the weighted average price of $0.179 to $0.189, seen on 30th and 31st December 2013.

The placement will raise a total of S$16,144,800. After deducting expenses, S$15.2 million will be raised. Half of this amount will be used for daily operations of the company and the other half will be used to collateralise the firm’s future bonding requirements.

The placement is expected to be concluded by the end of the month.

AusGroup Chief Executive Officer and Managing Director, Stuart Kenny, said, “The placement is a great way to start the year, boosting working capital as we work closely with new and existing customers to target opportunities in a changing market. Our business model is well placed to deliver a suite of integrated skills and services as projects enter long-term operation, following an unprecedented construction period in Western Australia. We also expect to continue increasing our exposure to the growing oil and gas sector in the coming year”.

In December last year, AusGroup announced that it had fully repaid its senior debt facilities and cash-backed all bank guarantees with the company’s club bank facility of ANZ Bank and HSBC Bank.

AusGroup is currently trading close to 11 times its FY2013’s earnings.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.  Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.