Cover-More capital raising to help fund Travelex purchase

The travel insurance group’s $73.3m capital raising will help fund the purchase of US-based Travelex Insurance.

Cover-More is buying the third largest retail travel insurance specialist in the US.

Travel insurance group Cover-More will launch a $73.3 million capital raising to help fund the $US105m ($137.5m) purchase of US-based Travelex Insurance Services.

The acquisition of the third largest retail travel insurance specialist in the US came after Cover-More (CVO) entered a trading halt yesterday in the promise of announcing a significant deal.

Around half of the purchase price will be covered by a capital raising that will invite both institutional and retail shareholders to contribute, with the remainder to be met via a drawdown of an existing debt facility.

Cover-More has not yet set the price of new shares to be offered through the raising, saying it would be determined by demand through the institutional bookbuild over the next two days.

The acquisition is expected to be finalised by the end of 2016.

The company also updated investors on its trading through the first two months of the financial year, saying it was “in line” with market expectations.

Its full-year earnings before interest, tax, depreciation and amortisation are tipped to fall in a range of $48.1m-$52.9m, around a 10 per cent improvement on last year.