Flowgroup recapitalises as it focuses on consumer business
(ShareCast News) - Residential gas and electricity supplier Flowgroup announced the successful re-capitalisation of the company in a shareholder update on Monday.
The AIM-traded firm said it completed a financing on 14 June, which raised £25.34m net of expenses.
That gross fundraising consisted of a £9.5m placing, £0.63m from the primary bid offer, £0.89m from the open offer, and £15.5m in convertible unsecured loan notes.
The company has 1,423,583,793 ordinary shares of 0.1p each in issue and admitted to trading, the board confirmed.
Flowgroup's board said its primary focus was now on continuing to develop and grow Flow Energy, the group's residential gas and electricity supply business.
The proceeds from the recent fundraising would enable the group to pay off existing liabilities, focus on accelerated growth in Flow Energy, and build a sustainable and profitable energy business.
Its goal was to grow Flow Energy into a leading mid-tier energy supplier from its current base of more than 250,000 customer fuel accounts.
The restructuring and "rightsizing" of Flow Products had also commenced, necessitating "significant" cost cutting including a consultation process with relevant employees, Flowgroup's board added.
It budgeted a small, but defined, cash allocation to support the business short-term, and was undertaking a strategic review to ensure it ceased to be an ongoing cash drain on the energy supply business which was now the main focus of the group.
It remained the board's intention to maximise the value of Flow Products for the benefit of all stakeholders.
Whilst customer growth was a key target for the company, the directors said they intended for that growth to be managed in a way that delivered long term profitability and shareholder value.
To that end, the company would update shareholders regularly on customer numbers and certain key performance indicators, the board pledged.
"Flow Energy is well placed to deliver significant revenue and customer growth as we build upon the firm foundation of our substantial retail platform," said group chief executive Tony Stiff.
"The newly simplified business structure and re-capitalisation set the stage for management to intensely focus on our core energy business where we believe high returns on invested capital are achievable.
"We are committed to growing Flow Energy and building shareholder value. We look forward to updating shareholders on our progress."