Service Stream clears institutional hurdle for $975 million Programmed acquisition

Institutional investors commit $404 million

Service Stream Limited (ASX:SSM) has cleared the first major funding hurdle for its proposed acquisition of Programmed, raising approximately $404 million through an institutional entitlement offer and placement. The capital was raised at $2.03 per new share, the same price set when the transaction was announced.

The result represents strong institutional participation in the $975 million Programmed deal, which was previously announced alongside a broader $475 million equity raising. Existing institutional shareholders took up approximately 92.5% of their entitlements, excluding ineligible holders, while the placement brought in new investors as well.

Nearly 199 million new shares add to funding base

The institutional component will issue approximately 199 million new shares in total: about 91 million under the entitlement offer, raising approximately $186 million, and roughly 108 million through the placement, raising approximately $219 million. The shares will rank equally with Service Stream's existing ordinary shares.

Settlement is expected on 18 November, with the new stock scheduled to begin normal trading on 19 November. That issuance will increase the number of shares on issue before the retail component is settled, meaning the final equity funding and dilution picture will not be known until the wider offer is complete.

Retail shareholders face the next funding test

The retail entitlement offer opens on 16 November and closes on 27 November. It forms the remaining part of the 1-for-4.9 accelerated non-renounceable entitlement offer, with results due to be announced on 2 December and retail shares expected to trade from 7 December.

Service Stream said the proceeds will be used in part to fund the acquisition of Programmed for a purchase price of $975 million, before adjustments for debt and debt-like items or any purchase price reduction. The purchase price is subject to customary completion adjustments and could fall by up to $25 million if Programmed misses a prescribed EBITDA hurdle for the year ending 31 March 2027. The acquisition itself remains subject to completion conditions, so the successful institutional raise is meaningful progress rather than the end of the transaction.