One51 urged to tap debt market instead of pursuing equity raise
Published 22/04/2016 | 02:30
One51 has been urged by some shareholders to borrow rather than raise equity in pursuit of its acquisition strategy.
Chairman Denis Cregan told a general meeting yesterday that the company is continuing to look at takeover targets after it postponed a stock market listing indefinitely.
"We're very confident that we will do some acquisition investment, we'll have organic growth, and we'll be able to fund that," he said.
"I suppose some of us have to get ourselves around to the way of thinking that, with the amount of funding that's available and generally out there, that the priority is, some people would say, to protect your equity and leverage [instead].
"I'm not so sure we're mentally at that stage yet, because I remember years back when you came in here and we were distressed sellers of a lot of assets...these are the problems of over-leveraging ... that's why there's a reticence, by way of explanation to you," he added.
"It wouldn't have been the first option but it's there as a very serious option...some of our shareholders are very clear in their views that this is the best way of developing the business."
Mr Cregan did not name any shareholders who had expressed that view. However, Dermot Desmond's International Investment & Underwriting (IIU) is One51's biggest shareholder with a 21pc stake, and was understood to be opposed to the IPO plan, including a proposal to cede some shares to lenders to its Canadian joint venture.
Mr Cregan said that based on the discussions the company had with shareholders, around 35pc of the votes would have gone against the resolution to approve the IPO, with 75pc approval needed for the resolution to pass.
Mr Cregan said the company could look again at doing an IPO in the future.
"It's a postponement indefinitely, but indefinite doesn't mean interminable and doesn't mean ad infinitum. We could well be back, if the ether changes in the financial markets ... equity might still be the flavour of the month in terms of funding.
Chief executive Alan Walsh told reporters that the company is looking at three to four potential acquisition targets, as reported by the Sunday Independent earlier this month.
He said the company may have to forego a number of opportunities as a result of pulling the plan to raise equity, but said that under the leveraging plan the company could have between €75-100m of firepower at its disposal.
"There's a very healthy relationship with all of our shareholders and we will continue to discuss the strategic goals and the funding requirements associated with those goals with all of our shareholders," Mr Walsh said.
"We're continuing to work on a number of things, the organisation is in a great position, the best position it's ever been in since it came into existence in 2005. There are lots of organic opportunities, a number of M&A opportunities.
"If we had proceeded with the plan, there was probably one or two bigger opportunities that we potentially could have unlocked, but with the caveat that you never know how any of these things are going to play out. What's in the best interest of the company is that we continue to grow shareholder value, which is what we'll be doing through those opportunities ... over the next 12 months.