Tabcorp expected to pass the hat around for $500m

Tabcorp has declined to comment on whether it would tap the market

Tabcorp is being tipped as the next ASX-listed blue-chip stock to tap the markets after medical device company Cochlear reached out to equity investors this week to secure more than $880m.

Expectations are that Tabcorp could be in search of somewhere between $400m and $500m.

It would no doubt call on the services of its longstanding adviser UBS to assist if it moves forward.

The company has declined to comment on whether it would tap the market, and some have suggested that to do so now would be a last resort.

Tabcorp is believed to be reeling from the closure of bars, clubs and TABs, and the cancellation of sports events and races.

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The one saving grace is that stores where its lottery products are offered remain open.

Revenue from licensed venues accounts for about 28 per cent of the Tabcorp revenues, while sports betting accounts for about 4 per cent.

The company says it has an undrawn facility of about $600m.

Other than a US bond worth $171.5m that matures in December, it has no debt maturities until 2022.

However, Tabcorp has $3.825bn of net debt.

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The wagering and lottery group’s market value has almost halved to $4.82bn in the past month.

Should it tap the market, it would be calling on support from Australian Super, which is a 7.56 per cent shareholder.

For the six months to December, its earnings before interest, tax, depreciation and amortisation were $596.5m, but the earnings stream which supported that debt is now drying up.

Another company that the market expects to raise equity is Aristocrat Leisure, which makes the gambling machines located in licensed premises.

In other sectors, the financial group Challenger could tap the market, not because it would be running out of funds but because it could breach liquidity requirements put in place by the Australian Prudential Regulation Authority.

Elsewhere, backing from major shareholder HMI Capital appears to have helped media company oOh!media secure $167m of fresh equity in a raising that has been on the cards since Friday last week.

HMI, an oOh!media shareholder in recent years, has been working with adviser Luminis Partners.

In exchange for its support, it has secured an oOh!Media board seat.

HMI can now lift its holding from about 19 per cent to 25 per cent.

The US-based private equity firm, which invests in media and technology companies, is also underwriting $17.7m of the raising, which was handled by Macquarie Capital.

Shares were sold at 53c each, a 37 per cent discount to the company’s last trading price of 84c, with the raising involving the equivalent of 130 per cent of its shares on issue.

The advertising billboard and signage operator gained $39m via a placement and $128m via an entitlement offer which will allow it to lift its debt covenants.

As of December, its net debt was as much as $354.5m.