Kelsian Group completes institutional entitlement offer and placement to support AAAHI’s acquisition

Key Takeaways:

1. Kelsian Group has completed a fully underwritten institutional entitlement offer and placement.

2. Under the Placement, KLS will release ~24.3 million New Shares and ~17.6 million New Shares under Institutional Entitlement Offer.

3. The Proceeds will be used to support AAAHI’s acquisition.

Kelsian Group Limited (ASX: KLS) announced the successful conclusion of its fully underwritten institutional placement and the accelerated institutional component of a 1 for 8.5 pro rata accelerated non-renounceable entitlement offer of new fully paid KLS ordinary shares.

Kelsian Group provides transport and tourism services. It aims to become the global leader in delivering essential journeys via safe & intelligent transport solutions and create brilliant client experiences.

The Placement and the Institutional Entitlement Offer received support from its existing as well as new institutional shareholders, raising ~AU$233 million at AU$5.55 per share. The offer price represents approx. 12.6% discount to the closing price of AU$6.35 on Monday, 13 March 2022.

Under the Placement, the Company agreed to issue ~24.3 million New Shares at the Offer Price to raise AU$135 million.

Under the Institutional Entitlement Offer, KLS agreed to issue ~17.6 million New Shares at the Offer Price to raise ~AU$98 million. The New Shares to be issued under the Placement and the Institutional Entitlement Offer will rank equally with current KLS ordinary shares in all respects from the date of their issue.

The Retail Entitlement Offer is expected to raise AU$45 million. The Retail Entitlement Offer is likely to open at 9:00 am. Under the Retail Entitlement Offer, retail shareholders with a registered address in Australia or New Zealand can apply for 1 New Share for every 8.5 existing Kelsian shares held at the Record Date on 20 March 2023. The shares issued under Retail Entitlement Offer will be at the same price as Placement and the Institutional Entitlement Offer.

Use of proceeds:

The proceeds will support Kelsian Group to acquire 100% of All Aboard America! Holdings Inc. (AAAHI) is a leading provider of passenger motorcoach services to corporate, government, education, LNG, and tourism sector customers in the USA.

On 15 March 2023, the Company announced the acquisition of AAAHI for an enterprise value of US$325 million, which is equivalent to AU$487 million. It is in addition to the assumption of AU$39 million of lease liabilities.

Significance of this acquisition:

AAAHI is a leading provider of passenger motorcoach services and has an extremely experienced management team. AAAHI services a loyal customer base of over 2,000 clients across corporate, government, education, LNG, and tourism sectors and achieves high contract renewals as well as recurring revenue. The business has a robust track record of strong revenue and earnings growth, with constant margin expansion via successful contract retenders, new clients & projects won, and wise cost control.

Acquiring AAAHI will allow KLS to enter the large & striking USA market via a geographically diversified & highly regarded operator. It will diversify the Company’s multi-modal operations across four nations. Further, the highly qualified local management team of AAAHI will support the Company’s growth plan in the coming period.

Bottomline:

The acquisition of AAAHI can be considered a significant milestone for the Company as it will play a vital role in achieving the Company’s vision. However, the acquisition is conditional upon customary conditions for a transaction of this nature. It will also require approval from the US Surface Transportation Board.

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