Fletcher completes $750M equity raising with sale of shares under retail shortfall bookbuild
By Tina Morrison
May 16 (BusinessDesk) - Fletcher Building has reached its $750 million equity raising target after selling 20.2 million shares under its retail shortfall bookbuild, at a premium price to the entitlement offer but a discount to the trading price of the shares.
The building company said it sold the shares under the retail shortfall bookbuild for $6.45 apiece, a premium of $1.65 per share over the entitlement offer price of $4.80. The shares closed yesterday at $6.56 and have dropped 9.8 percent this year. Auckland-based Fletcher said the retail bookbuild was well supported by eligible institutional shareholders and new investors. Eligible retail shareholders who elected not to take up their entitlements and ineligible retail shareholders will receive $1.65 for each entitlement not taken up by them.
The sale of shares to retail investors follows an earlier sale to institutional investors and completes Fletcher's $750 million equity raising. Fletcher last month unveiled a $1.25 billion refinancing plan including the share sale to raise $750 million and a $500 million standby banking facility that could be used to repay noteholders in the US private placement market.
The company also announced plans to sell its Formica and steel roofing tiles businesses after a strategic review, retreating to its main New Zealand and Australian markets. Fletcher dumped its former chief executive last year in the face of losses at its Building + Interiors unit and in February this year chair Ralph Norris said he would step down to take responsibility for the company's poor performance.
“The completion of the entitlement offer means we can now significantly reduce group debt and improve the capital structure of Fletcher Building," chief executive Ross Taylor said in a statement. "This puts us in a stronger position to focus our portfolio and pursue a new group strategy, and we look forward to briefing the market on this in more detail in June.”
The company said yesterday it had agreed revised terms with holders of its notes in the US Private Placement market, having been forced to seek a waiver when it breached the terms of the debt. Its syndicated facility agreement was trimmed to $925 million from $1.27 billion as a result of the equity raising, which netted $725 million after costs. With the conclusion of lender negotiations, Fletcher has cancelled the $500 million standby facility it had put in place.
Following this repayment and based on the company’s March 31 financial position, its gross borrowings will be $1.79 billion and total available debt facilities will be $2.7 billion, it said.