Steel & Tube attracts 'several new large investors'

Steel & Tube attracts 'several new large investors' in $20.8M placement

By Paul McBeth

Aug. 8 (BusinessDesk) - Steel & Tube Holdings attracted several new investors in the first tranche of a deeply discounted $80.9 million capital raise, which it will use to shore up its balance sheet in a wider restructuring of the steel building products supplier.

The Lower Hutt-based company sold 18.1 million shares at $1.15 apiece, raising $20.8 million, to new and existing investors, it said. The second tranch of the capital raise is a fully underwritten pro rata one-for-1.9 rights offer, which will raise $60.1 million at $1.05 apiece. That's a deep discount to the last trading price of $1.46, and the shares have already dropped 30 percent so far this year. The company had 8,189 shareholders as at July 31.

"We received strong support from existing institutional investors and were pleased to welcome several new large investors to the Steel & Tube register, including a number of New Zealand and Australian investment funds," chair Susan Paterson said in a statement. "The interest in the stock and significant support by sophisticated and rigorous investors, demonstrated confidence in the refresh of the board and management and the strategic direction of the company."

The funds raised will repay debt, giving Steel & Tube enough headroom to pursue restructuring initiatives under new chief executive Mark Malpass. The company had to get a waiver from its banking partners after breaching a lending covenant earlier this year.

Steel & Tube yesterday said underlying earnings were slightly ahead of forecast at $16.5 million, but it will report a loss before interest and tax of about $38 million as books one-off charges from reduced software amortisation costs due to delay in implementing a new enterprise resource planning system.

The shares will resume trading today.

(BusinessDesk)

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