Austal Issues Shares to Raise Capital for Alabama Yard Expansion

Austal Ltd., the Australian parent company of defense shipbuilder Austal USA, has announced a capital raise of as much as US$140 million to pay for the expansion of its main shipyard in Mobile, Alabama. 

Austal USA is the core of Austal Ltd.’s enterprise, and it is rapidly growing to meet the needs of its primary customer, the U.S. Navy. It holds contracts for an array of smaller auxiliary vessels, along with a large-scale subcontract award for module construction to support General Dynamics Electric Boat’s submarine projects. 

On Tuesday, Austal announced that it plans to place about 53 million new shares with institutional investors at a price of US$2.40 per share, a discount of about 15 percent compared to the company’s last closing price. The funds will go towards construction of the US$300 million Final Assembly 2 complex, which began construction last July and is due for completion in 2026. The infrastructure project is located just south of Austal’s current complex, and will include a new assembly hall, a wharf and a new shiplift, which will make it easier for the company to launch newbuilds. The bay will be used for building large modules for the Coast Guard’s Offshore Patrol Cutter program and for the Navy’s T-AGOS-25 research/surveillance vessels. 

With the addition of a shiplift, Austal will also have the capability to bring vessels back onshore for maintenance in addition to its newbuild work. 

Austal requested a brief trading halt Tuesday morning pending the announcement. “This announced raise will ensure that Austal is appropriately funded for FA2, which one complete, will facilitate the delivery of large steel vessels in the current pipeline for the US Navy and ensure Mobile continues to be well placed to execute on future opportunities,” said Austal CEO Patrick Gregg in a statement. 

Austal is widely expected to