Australian speciality women’s wear retailer City Chic is preparing for a proposed divestment of its Avenue label and a capital-raising initiative.
In a Stock Exchange announcement on 18 June 2024, the retailer confirmed that it has requested back-to-back trading halts on the exchange until 24 June to detail the proposed divestment.
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The company will make an announcement related to a fully underwritten institutional placement and pro-rata accelerated non-renounceable entitlement offer of its new ordinary shares.
In the filing, City Chic stated: “City Chic considers the ‘back to back’ trading halts are necessary to ensure the institutional component of the entitlement offer is undertaken in an orderly manner, to assist City Chic in managing its disclosure obligations in relation to the entitlement offer, and to ensure that trading does not take place in an uninformed or disorderly market.”
According to a report by Finance News Network, the retailer aims to raise A$25m, which could dilute existing shareholders’ stakes by more than a third. The company had a market cap of A$68m ($44.9m) as of 17 June 2024.
City Chic acquired the online assets of Avenue for more than A$24m in 2019, and the sale to a cashed-up offshore buyer is now underway, with details to be confirmed.
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By GlobalDataCanaccord Genuity is leading capital raising efforts, having commenced discussions with listed equity investors.
Meanwhile, City Chic shares have already entered a trading halt.
The company has seen significant growth since its inception in 1999, expanding from a Sydney boutique to a global brand with more than 200 locations.
An announcement after market close on 17 June 2024 revealed that Blundy’s BBFIT Investments, based in Singapore, increased its stake in City Chic from 9.9% to 11.3% through the purchase of 3.3 million shares.
The transactions, totalling $920,670, occurred on 13, 14 and 17 June, enhancing the group’s voting power.
