This article is from the Australian Property Journal archive
INVESTORS easily covered dual-listed Fletcher Building’s NZ$700 million equity raising, as the struggling products manufacturer and home builder successfully sought to boost its balance sheet.
The raising comprised a fully underwritten NZ$282 million institutional placement and NZ$418 million pro rata accelerated non-renounceable entitlement offer.
The fixed price of NZ$2.40 per new share represented was at a 17.0% discount to last close price on of NZ$2.89.
“We believe the equity raising bolsters our financial position, assisting us to better endure near-term market headwinds,” said incoming group managing director and CEO Andrew Reding.
“With a strengthened balance sheet, the company can focus on executing key operational initiatives in preparation for a market recovery.”
Upon completion of the equity raising, Fletcher Building’s pro forma leverage reduces from 1.99x to 1.22x.
In addition to the equity raising, Fletcher Building said it “remains committed to ongoing cost reduction initiatives to manage profitability in the current operating environment, and we have targeted approximately NZ$180 million of gross overhead cost savings to be delivered in FY25”.
Fletcher Building swung to a loss in FY24, as weak results in its materials and distributions divisions dragged down revenue, while the company said it is exploring capital partnership options.
There has been a host of changes at the top. Previous CEO Ross Taylor exited after a poor half-year result, while chief financial officer Bevan McKenzie resigned and chairman Bruce Hassell also left, while directors Rob McDonald and Martin Brydon both brought forward their exits from the board.
