Fixed-line and broadband player Smart Telecom is set to issue almost 190 million new shares worth €55 million to pay for its expansion plans.
The Irish-based, London-listed company said yesterday that it plans to raise £30 million (€44 million) through the placing of shares with investors.
The units will be priced at 22 pence each, meaning that the placing will exceed 136 million shares.
At the same time, it is also planning to buy the 90 per cent of Broadband Communications Ltd that it does not own by issuing 52.1 million units at 15 pence each.
That values the Broadband Communications stake at just over €11 million. Three brothers - Brendan, Alan and Fergal Murtagh - own the company.
They will end up with close to 14 per cent of Smart Telecom once both share issues are completed. They have committed themselves to holding the stock for at least 18 months.
Brendan Murtagh has pledged to underwrite the 22 pence a unit share placing. This means that if any shares are not successfully placed, he will take them up.
Smart announced that it plans to appoint Alan Murtagh and Fergal Murtagh to its board as non-executive directors.
The company bought 10 per cent of Broadband Communications last year, and took an option to acquire the remaining 90 per cent within three years.
The two placings will result in the company issuing a total of 188.4 million new shares.
It currently has 167.8 million shares issued. The company's market capitalisation at close of business in London last night, where it close one penny up at 21.5 pence, was £36.0879 million sterling (€53 million).
Chief executive Oisín Fanning told The Irish Times that existing shareholders have no objections to the dilution of the company's shares, and said that many would take part in the placing. "I think it's going to be oversubscribed," he said.
Shareholders will have to approve the 22 pence a unit placing at an extraordinary general meeting. The €44 million will be used to pay for the roll-out of its broadband network.
The company yesterday published interim results showing that turnover had jumped to €23.7 million in the first six months of the year from €9 million in the same period in 2004.
Losses before interest, tax and write offs were up to €8.9 million from €3.3 million, and operating losses rose €6 million to €10.4 million.
