Aspen Group Sells Eureka Shares for $27.5M, Cuts Debt, Keeps EPS Steady
Aspen Group has offloaded its remaining stake in Eureka Group Holdings for $27.5 million, using the proceeds to significantly reduce its net debt while maintaining its FY25 earnings guidance.
- Sale of 55 million Eureka shares at $0.50 each
- Proceeds of $27.5 million to reduce net debt to approximately $92 million
- Gearing ratio lowered to about 14%
- Underlying EPS guidance for FY25 remains at 16.7 cents
- Gain on sale excluded from underlying earnings
Strategic Share Sale
Aspen Group (ASX: APZ) has announced the sale of its remaining 55 million shares in Eureka Group Holdings (ASX: EGH) at a price of 50 cents per share, generating $27.5 million in proceeds. This move marks a decisive step in Aspen’s ongoing strategy to streamline its asset portfolio and strengthen its balance sheet.
Debt Reduction Focus
The funds raised from this sale, combined with a recent equity raising, will be directed towards repaying debt. Aspen expects this to reduce its net debt to around $92 million and lower its gearing ratio to approximately 14%. This reduction in leverage is a positive signal to investors, indicating a more conservative financial position and potentially greater flexibility for future growth or capital management.
Earnings Guidance Unchanged
Despite the significant transaction, Aspen has maintained its underlying earnings per share (EPS) guidance for the 2025 financial year at 16.7 cents. Notably, the gain from the Eureka share sale will be excluded from underlying earnings, which suggests management is keen to present a clear view of operational performance without one-off gains clouding the picture.
Market Implications
This sale could be interpreted as Aspen’s move to focus more tightly on its core operations, possibly signaling a shift away from non-core investments. The improved balance sheet metrics may also enhance Aspen’s appeal to conservative investors and credit rating agencies. However, excluding the gain from underlying earnings means the market will need to look carefully at both reported and underlying results to fully understand the company’s financial health.
Looking Ahead
With a cleaner balance sheet and steady earnings outlook, Aspen appears positioned to navigate the remainder of FY25 with greater financial stability. The company’s next steps will be closely watched, particularly how it plans to deploy its reduced debt capacity and whether it will pursue further portfolio adjustments or growth initiatives.
Bottom Line?
Aspen’s decisive debt reduction and steady earnings guidance set the stage for a more focused and financially resilient future.
Questions in the middle?
- What are Aspen’s plans for the freed-up capital following debt reduction?
- Will Aspen pursue further asset sales or acquisitions after exiting Eureka shares?
- How will the market react to the exclusion of the sale gain from underlying earnings?
