Austal Limited to Raise $220M for U.S. Expansion

About Austal Limited

Established in 1988 and headquartered in Henderson, Western Australia, Austal Limited (ASX: ASB)  is a global shipbuilding company specialising in the design, construction, and support of defence and commercial vessels. The company operates shipyards in Australia, the United States, and the Philippines, serving customers worldwide.

Austal is renowned for its innovative designs and advanced shipbuilding techniques, delivering vessels such as littoral combat ships, expeditionary fast transport ships, and high-speed passenger ferries. Listed on the Australian Securities Exchange under the ticker ASB, Austal has built a strong reputation for quality and reliability in the maritime industry.

Details Of The Equity Raising

On 11 March 2025, Austal announced a comprehensive equity raising strategy to fund its expansion plans and strengthen its financial position. The key components of this initiative are:

Austal is conducting a non-underwritten $200 million institutional placement, offering new fully paid ordinary shares at $3.80 per share. This price reflects a 15.6% discount to the last traded price, making it an attractive opportunity for institutional investors. The placement is expected to result in the issuance of approximately 52.63 million new shares.

In addition to the institutional placement, Austal is offering a non-underwritten Share Purchase Plan (SPP) to eligible shareholders, aiming to raise up to $20 million. Under the SPP, eligible shareholders can subscribe for new shares at the same price of $3.80 per share, with application amounts ranging from $1,000 to $30,000. The SPP is designed to provide existing shareholders with an opportunity to participate in the equity raising on similar terms as institutional investors.

As part of the equity raising, Austal’s founder, John Rothwell, plans to sell $50 million worth of shares, contingent upon full subscription of the placement. The remaining shares held by Mr. Rothwell will be subject to a six-month escrow period, demonstrating his ongoing commitment to the company.

Purpose Of The Equity Raising

The funds raised through this equity initiative are earmarked for strategic investments and to bolster Austal’s financial flexibility:

A significant portion of the proceeds will be allocated to the Final Assembly 2 expansion program at Austal’s shipyard in Mobile, Alabama. This expansion aims to enhance the company’s steel shipbuilding capabilities, positioning Austal to secure new contracts with the U.S. Navy and other defence clients. The investment underscores Austal’s commitment to growing its presence in the U.S. defence market.

The equity raising will also provide Austal with enhanced financial flexibility to pursue growth opportunities, including potential acquisitions, new project developments, and investments in advanced technologies. By strengthening its balance sheet, Austal aims to remain competitive in the global shipbuilding industry and continue delivering value to shareholders.

Market Reaction And Outlook

Following the announcement, Austal’s shares were placed in a trading halt to facilitate the equity raising process. The offering price of $3.80 per share represents a 15.6% discount, which may impact short-term share performance.

The successful execution of the Final Assembly 2 expansion program is expected to enhance Austal’s capacity to deliver complex steel vessels, potentially leading to new contract awards and revenue streams. Additionally, the improved financial flexibility positions Austal to capitalise on emerging opportunities in the defence and commercial maritime sectors.