Australian traffic hardware and software solutions provider Traffic Technologies (ASX: TTI) has confirmed it will use the proceeds of a recent $7.19 million capital raising to repay a $6 million debt to financier ADM Capital.
The proceeds comprised $3.40 million raised through a rights issue, $1.62 million in a shortfall placement under the rights issue, and $2.17 million via a share placement in November to recapitalise the company.
The funds are being used to pay off a significant portion of Traffic Technologies’ debt, reducing its interest costs and strengthening its balance sheet for future growth.
The repayment is expected to result in an annualised interest saving of up to $1.2 million.
The balance of funds raised have been applied towards covering the costs of the right issue offer and for working capital.
In November, ADM Capital made a binding commitment to take up part of any shortfall in Traffic Technologies’ rights issue, for a total 6.66 million shares.
The commitment was conditional on Traffic Technologies’ debt facility with ADM Capital being repaid in full as first priority from the proceeds of the rights issue.
Traffic Technologies managing director Con Liosatos said the company would continue to work towards further reducing its debt in 2022.
“The repayment of a large portion of our debt to ADM Capital represents a significant milestone for our business with immediate benefits to our bottom line,” he said.
“Our company is committed to reducing our debt profile through the new year as well as driving continued contract wins and recurring revenue growth.”
Traffic Technologies is Australia’s premier traffic company, providing innovative and cost effective solutions to the traffic industry.
Established in 2004 and listed on the ASX in 2005, the company has gained a reputation in a demanding industry through its technical products, signage division and traffic controller operations.
Earlier this month, Traffic Technologies was awarded a contract worth up to $10 million to supply traffic signs and safety products to local councils across Victoria.