ASX-listed ISP, TPG Telecom (ASX:TPM), is looking to raise $70 million in capital to reduce the company’s debt as a prelude to its acquisition of Pipe Networks.
The retail ISP, which merged with competitor, Soul, in 2008, flagged plans to buy the wholesale networking giant in November. The deal is worth $350m and is set to go ahead despite apprehension from Pipe Network clients and competing ISPs over wholesale network access.
According to an ASX statement, TPG’s capital raising exercise will entail share placement by book build to investors, as well as an offer to Soul/TPG’s existing shareholders to acquire an additional company stake. A trading halt has been called on TPG shares while the capital raising process is undertaken.
The ISP also indicated it was on track to achieve its profit guidance of up to $150 million pre-tax earnings and $57m in net profit, announced in November last year. The company claimed its net earnings after tax had hit $22.5m in the first five months of the financial year to December 31, 2009, off pre-tax earnings of $65m.