Toople (LSE: TOOP ), has announce a conditionally placing of 704m new ordinary shares to satisfy investor demand following the string of recent contract win announcements.
The shares have been placed with institutional and other investors at 0.11p per share, thereby raising £0.774m before expenses.
The Placing was “significantly oversubscribed” and utilised all of the existing share issue capability of the Company.
Toople Chairman Richard Horsman commented: “The Company has made substantial operational and financial progress in recent months and securing this injection of capital leaves the Company with a healthier balance sheet and well capitalised to continue our growth strategy Given the general economic uncertainty in the UK and with the full impact of COVID 19 not yet fully clear, the Board felt it appropriate and prudent to take advantage of market demand. In addition, we are beginning to see acquisition opportunities as a result, and we are well-placed to consolidate this market."
Use of Proceeds
The Net Proceeds of the Placing will used be to support the Company's growth initiatives and accelerate the timeline to profitability through:
- Increased investment in targeted marketing initiatives
- enhance the Company's current service offerings
- Strengthening the balance sheet
Andy Hollingworth CEO added: "Importantly, we expect this funding to take the Company towards profitability and positive cash generation.
The market confidence in our strategy and the recent contract wins are further evidence that Toople is well placed to take advantage of the macro drivers which are expected to precipitate substantial growth for the Group, specifically HM Government's commitment to the rolling out of fibre telecommunication infrastructure to replace copper and the necessary and ultimately unavoidable upgrade of the country's network from 4G to 5G."
Shares in TOOPLE have performed exceptionally strongly over the past three months from lows of 0.05p in August to 0.122p following this placing announcement.
The macro drivers for TOOPLE indicate structural growth opportunities across the SME Telco markets. Recent contract wins point towards several compelling value propositions from the Company across broadband, mobile and fixed line services.
Whilst some investors may be surprised by the oversubscribed placing, the stronger balance sheet clearly provides management greater flexibility to target additional organic growth opportunities across their target markets, which should lead for a positive outturn for FY20 and accelerate the Company’s path to profitability and positive cashflow in FY21.