DTI Group Launches $2.69M Entitlement Offer to Repay Major Shareholder Loan

Context of the Capital Raise

DTI Group Limited (ASX: DTI), a specialist in transit technology solutions, has announced a fully underwritten pro-rata entitlement offer to raise up to approximately $2.69 million. This capital raising initiative is designed to strengthen the company’s balance sheet by repaying a significant loan and supporting general working capital needs.

The offer is priced at $0.006 per new fully paid ordinary share, allowing eligible shareholders to subscribe for one new share for every existing share held as of the record date, 8 May 2025. This non-renounceable entitlement offer is open exclusively to shareholders with registered addresses in Australia and New Zealand.

Underwriting and Loan Repayment

A key feature of the offer is its full underwriting by Finico Pty Ltd, a major shareholder in DTI Group. Finico has committed to underwriting 100% of the shortfall, which could amount to up to 448.55 million new shares. This underwriting arrangement is coupled with a $1.25 million loan facility that Finico has extended to DTI, which the company intends to repay using the proceeds from the entitlement offer.

The underwriting fee payable to Finico is 1% of the underwriting commitment, reflecting the financial support and confidence from a major stakeholder. This arrangement reduces the risk of the capital raise falling short and provides a clear path for debt reduction.

Offer Mechanics and Timetable

The entitlement offer is scheduled to open on 13 May 2025 and close on 10 June 2025, with the possibility of a closing date extension until 4 June. New shares issued under the offer will rank equally with existing shares and are expected to commence normal trading on the ASX from 19 June 2025.

Shareholders who are ineligible to participate due to their registered address outside Australia or New Zealand will have their entitlements sold by a nominee, subject to ASIC approval. Net proceeds from such sales, if any, will be distributed to those ineligible shareholders, although there is no guarantee of net proceeds after costs.

Strategic Implications

DTI Group’s decision to raise capital through a fully underwritten entitlement offer signals a strategic focus on deleveraging and shoring up liquidity. By repaying the Finico loan, the company reduces its financial obligations and interest burden, potentially improving its financial flexibility.

However, the offer will result in significant dilution for existing shareholders who do not participate, as the one-for-one share issuance effectively doubles the number of shares on issue. The company has reserved the right to alter the use of funds, which introduces some uncertainty around future capital allocation.

Overall, this capital raise reflects DTI’s proactive approach to managing its capital structure amid ongoing market and operational challenges in the transit technology sector.