ASX-listed sustainability-focused recycling business Close The Loop has found a US acquisition it likes enough to ask investors to tip in $40 million at no discount.

Fund managers were told the company had hammered out a deal to buy 100 per cent of Texas-based refurbished electronics business ISP Tek Services, in a move that would help it hone in on resources recovery in the US.

ISP, in turn, would be able to use Close The Loop’s ex-US presence to expand globally, the term sheet said.

ISP made $US49 million revenue in the 12 months to October and had $US13.7 million net profit after tax.

The total acquisition price was $US66 million (4.8-times NPAT), split as $US35 million cash, $US5 million earnouts, $US11 million in Close The Loop scrip to ISP founders, and the rest in convertible notes.

It’s a big bet for Close The Loop, which had a $111 million market capitalisation and is paying about $99 million for ISP.

It had hired Shaw and Partners and Aitken Mount as joint lead managers for the raising, which was at 33 cents per share, the same price as the last close but a 10.4 per cent discount to the 10-day volume weighted average price. The brokers launched the deal this morning with enough interest already to get it over the line.

Concurrent to the equity raising, Close the Loop had secured $US52.5 million worth of loans from PGIM’s private credit arm Pricoa Private Capital.

Article source: AFR, 15 March 2023