SRJ Launches 8-for-9 Rights Issue at A$0.004 to Fund $6M Middle East Contract

Strategic Capital Raise to Accelerate Middle East Growth

SRJ Technologies Group plc (ASX – SRJ) has launched a fully underwritten accelerated non-renounceable entitlement offer to raise approximately A$2.53 million at an offer price of A$0.004 per new CHESS Depositary Interest (CDI). The offer, open to eligible institutional and retail securityholders, represents an 8-for-9 rights issue, allowing existing investors to subscribe for eight new CDIs for every nine held.

The capital raise is a key component of SRJ’s refreshed strategy under new leadership, aiming to transform the company from a niche mechanical integrity and inspection provider into a regional and international Asset Integrity Maintenance (AIM) partner. This strategy emphasizes securing long-term, embedded maintenance contracts, leveraging AI-driven predictive maintenance platforms, and integrating Environmental, Social and Governance (ESG) compliance solutions.

Funding the UAE Acquisition and Joint Venture

Proceeds from the entitlement offer will primarily fund the completion of SRJ’s acquisition of First Avenue General Contracting L.L.C, a UAE entity registered with a Middle East National Oil Company (NOC). This acquisition is expected to provide SRJ with immediate eligibility to bid for NOC tenders and contracts, a critical step in establishing a foothold in the lucrative Middle East energy sector.

In parallel, SRJ has entered into a 50 – 50 joint venture agreement with CAPSA Engineering & Contracting LLC, an NOC-registered entity, to deliver a multi-year contract valued at over US$6 million. The joint venture will execute a two-phase project involving design, implementation, and ongoing support and maintenance, with approximately 70% of revenue expected in the first year.

Operational Restructuring and Regional Focus

Alongside the capital raise and strategic transactions, SRJ is undertaking a significant operational restructure. This includes relocating its headquarters to Abu Dhabi, UAE, closing offices in Jersey and Australia, and reducing workforce size by approximately 30%. These measures aim to align the company’s cost base with its new regional focus and improve operational efficiency.

The leadership team, led by newly appointed CEO Kurt Reeves and Chairman George Gourlay, brings extensive experience in the Middle East energy sector, positioning SRJ to capitalize on regional growth opportunities. The company is targeting embedded long-term asset maintenance contracts with National Oil Companies across the UAE, Saudi Arabia, Qatar, and beyond.

Risks and Market Implications

While the strategic initiatives offer promising growth avenues, SRJ acknowledges several risks. These include uncertainties related to the acquisition of a currently non-trading entity, integration challenges, regulatory compliance with evolving NOC requirements, and the execution risks inherent in joint ventures. Additionally, the entitlement offer will dilute existing shareholders who do not participate, and the company’s CDI price may fluctuate post-quotation.

SRJ’s ability to secure and renew long-term contracts, successfully integrate AI and ESG solutions, and manage operational transitions will be critical to realizing its growth ambitions. The company’s fully underwritten entitlement offer, managed by Peloton Capital Pty Ltd, provides a degree of funding certainty to support these objectives.