Wesfarmers to raise A$2.8 bln selling shares

Wesfarmers to raise A$2.8 bln selling shares to pay Coles debt

Jan. 22 – Wesfarmers Ltd., Australia’s second-largest retailer, plans to raise A$2.8 billion selling shares at a discount to repay some of the debt taken on with its acquisition of Coles Group.

Investors will be offered shares at A$13.50 apiece via a 3-for-7 pro-rata entitlement offer, raising A$1.9 billion. A further A$900 million will be raised through the placement of shares to Capital Research Global Investors and Colonial First State at A$14.25 a share, the Perth-based company said in a statement. The shares traded on the ASX at A$16.83 before being halted.

Wesfarmers spent some A$18.2 billion to acquire Coles in 2007 in a record Australian takeover, stacking up debt that has left the company exposed to the credit crunch and higher borrowing costs. It raised A$2.5 billion last may selling shares at A$29 apiece to repay some of the debt. Shares of Wesfarmers have tumbled 48% in the past six months.

The capital raising will allow Wesfarmers to reduce total debt as at Dec. 31 of A$9.7 billion to A$6.9 billion. The company also dashed hopes of a fatter dividend payment this year. Dividends may amount to A$1 this year, down from the A$2 it had flagged previously.

(Businesswire)

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