Tabcorp (tah.ASX:Quote,News) said that it had launched an institutional placement of shares to raise $300 million to strengthen its balance sheet and increase its funding flexibility.
The placement is being conducted at $5.80 per share, representing a 9.9 per cent discount to Tabcorp's closing price on January 28.
Following the placement, Tabcorp will undertake a share purchase plan providing shareholders with the opportunity to subscribe for up to $5,000 in Tabcorp shares.
Tabcorp said it reserved the right to scale back applications if they exceed $150 million in total.
Tabcorp shares were in a trading halt, pending the outcome of the institutional placement. They closed yesterday at $6.79.
Tabcorp today reported a net profit after tax for the first half of the 2008/09 financial year of $263.2 million, down 3.7 per cent on the prior corresponding period.
Normalised net profit after tax was $262.0 million.
Normalised earnings included an additional amortisation charge against the value of Tabcorp's Victorian wagering and gaming licences of $13.2 million.
If the previous year's earnings were adjusted by the same amount, normalised earnings were up 5.4 per cent.
Tabcorp chief executive Elmer Funke Kupper said the first half result reflected Tabcorp's focus on core operations, customer service and competitive position.
"This carried through in the first few weeks of the second half, with revenues up in each of our divisions," he said.
"Whilst we expect that economic conditions will become more difficult in the coming months, our business is well placed for the economic environment, and we will continue to concentrate on the basics."
Over the next 12 months, Tabcorp would incur significant additional charges arising from new wagering product fee arrangements announced by the racing industry last year and higher gaming taxes in Queensland casinos.
"These are very unwelcome imposts on our business, at a time when state governments and racing industries should encourage investment by businesses that provide a critical source of revenue and employ thousands of people," Mr Funke Kupper said.
Tabcorp would continue to manage its balance sheet conservatively and would reduce its 2010 capital investment program by about 30 per cent, excluding the $475 million redevelopment of the Star City casino in Sydney.
Mr Funke Kupper said Tabcorp was adjusting its business model to reflect the new wagering market - launching its Northern Territory bookmaking operation, Luxbet, and increasing promotion of the totalisator business.
Reported group revenue in the six months to December 31, 2008, lifted 5.6 per cent to $2.14 billion.
Revenue was boosted by the wagering division's recovery from the impact of the equine influenza outbreak during the prior financial year, and positive growth in the gaming division.
Revenue from the casinos division was flat, however.
Group expenses rose 4.9 per cent, including a bad debt provision of $11.5 million in the casinos division.
Operational expenses were up 2.6 per cent.
In the casinos division, earnings before interest and tax (EBIT) fell 12.7 per cent to $165.9 million amid tough trading conditions.
Mr Funke Kupper said the casinos division performance was below expectations, particularly in NSW, where pressure on consumer spending had offset growth in visitation and stable market share.
EBIT for the wagering division was up 14.9 per cent at $145.4 million, on the back of recovery from the equine influenza outbreak and positive growth in sportsbetting.
EBIT in the gaming division rose 11.1 per cent to $144.1 million, boosted by the expanded distribution of Keno operations in NSW hotels.
Tabcorp declared an interim dividend of 35 cents per share.
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