Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


UPDATE A2 to raise $20M to speed up UK, Chinese aspirations

UPDATE A2 to raise $20M to speed up UK, Chinese aspirations

(Update includes MD comments, flags UK, Chinese infant formula as spending priorities)

Dec. 5 (BusinessDesk) - A2 Corp, which markets milk products with a protein variant claimed to have health benefits, plans to raise $20 million in a placement in a bid to accelerate growth in its UK joint venture and Chinese infant formula businesses.

The capital raise coincides with its three major shareholders selling down their stakes to boost liquidity to allow a shift to the NZX main board. The placement to institutions and the selldown are both priced at 50 cents a share, a 26 percent discount to the price of their last trades on the NZAX, at 68 cents, before being halted.

They remain in trading halt pending the placement. Inclusion in the NZX 50 could happen as soon as February next year.

The $20 million will be used to target the UK liquid milk market, the Chinese infant formula market, lifting awareness of the A2 brand in Australia and New Zealand, entering the Chinese liquid milk market with UHT milk and going after another key market such as the US, Canada or Germany.

Managing director Geoffrey Babidge told BusinessDesk the new equity "will provide future funding for the current two growth initiatives" with the UK and Chinese infant formula at the top of the list.

Babidge said the move comes after careful deliberation by the board on the best capital structure for the company, and wasn't an opportunistic leap on the coat-tails of Fonterra Shareholders' Fund's successful listing last week.

"The timing of Fonterra was a coincidence - we're pleased obviously there's strong interest in dairy and obviously that Fonterra's equity raise was a success," Babidge said.

The Sydney-based company has been listed on the NZAX market since 2004 and in that time has grown to $411 million – bigger than some existing companies on the NZX 50 Index. But more than half the shares are held by three investors.

ASX-listed Freedom Foods Group owns about 26 percent, Mountain Road Investments, associated with chairman Cliff Cook has 22.7 percent and Equity Group Investments has 8.3 percent currently. Their holdings will reduce to 18 percent, 8.9 percent and 4.6 percent respectively after the selldown.

Freedom Foods, Mountain Road and Equity Group have undertaken not to sell any more of their shares until at least 10 days after the release of A2’s results for the year ending June 30, 2013.

The shares have soared 179 percent this year on rocketing Australian sales and after it began selling infant formula into China and expanded in the UK. Profit in the year ended June 30 more than doubled as revenue jumped 44 percent. The bulk of sales were in Australia.

The plan to raise $20 million follows more modest capital raisings, adding up to $7.7 million last year. As at June 30 it had cash on hand of $6.6 million and little or no net debt.

Last month, in announcing the results of a strategic review, the company confirmed it would continue to be “capital light,” relying on partnerships to drive its growth into new dairy markets and categories.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Gordon Campbell: On Tiwai Point (And Saying “No” In Greece)

Its hard to see how Rio Tinto’s one month delay in announcing its intentions about the Tiwai Point aluminium smelter is a good sign for (a) the jobs of the workers affected or (b) for the New Zealand taxpayer. More>>

ALSO:

Half Empty: Dairy Product Prices Extend Slide To Six-Year Low

Dairy product prices continued their slide, paced by whole milk power, in the latest GlobalDairyTrade auction, weakening to the lowest level in six years. More>>

ALSO:

Copper Broadband: Regulator Set To Keep Chorus Pricing Largely Unchanged

The Commerce Commission looks likely to settle on a price close to its original decision on what telecommunications network operator Chorus can charge its customers, though it probably won’t backdate any update. More>>

ALSO:

Lower Levy For Safer Cars: ACC Backtracks On Safety Assessments

Dog and Lemon: “The ACC has based the entire levy system on a set of badly flawed data from Monash University. This Monash data is riddled with errors and false assumptions; that’s the real reason for the multiple mistakes in setting ACC levies.” More>>

ALSO:

Fast Track: TPP Negotiations Set To Accelerate, Groser Says

Negotiations for the Trans-Pacific Partnership will accelerate in July, with New Zealand officials working to stitch up a deal by the month's end, according to Trade Minister Tim Groser. More>>

ALSO:

Floods: Initial Assessment Of Economic Impact

Authorities around the region have compiled an initial impact assessment for the Ministry of Civil Defence, putting the estimated cost of flood recovery at around $120 million... this early estimate includes social, built, and economic costs to business, but doesn’t include costs to the rural sector. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news