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Orion to raise $32.9m in rights offer

NZN 30/05/2017 Pattrick Smellie

Orion Health is to raise $32.9 million in a discounted two-for-nine rights issue to shore up working capital after posting a full-year loss that reflected weaker Europe, Middle East and Africa sales.

It expects to be profitable in 2018 even after a drop in recurring income from a US customer.

The health management software company's net loss was $34.2m in the year ended March 31, down from $54.4m a year earlier, and in line with its revised guidance last month that warned delayed execution of contracts would impact earnings.

Operating revenue fell to $199m from $206.9m and total net cash outflows grew to $51.5m from $38.5m, leaving Orion with cash reserves of $6m at balance date, $30m in working capital debt facilities and a $10m standby facility.

The rights will be issued at 90 cents per share, a 21.4 per cent discount to the theoretical ex-rights price of $1.14, based on Monday's closing share price of $1.20, it said.

The shares fell 8.3 per cent to $1.10 immediately after NZX trading commenced at 10am Tuesday and have declined 40 per cent this year.

Describing the last financial year as "challenging", Orion chief executive and 50.8 per cent majority shareholder Ian McCrae said the company was still on track to achieve profitability in the current financial year.

The $32.9m two-for-nine rights offer and existing bank facilities would "provide the business the financial resources to achieve" profitability in the second half of the current financial year.

The record date for the rights offer is June 8, and further details on the rights offer, including how shareholders can take up their rights, are expected to be released on or around June 7. The offer is expected to open on June 14.

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