Bega Cheese has announced a plan to raise up to $250million from investors.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
On Tuesday, September 11, an announcement on the ASX stated a $200million institutional placement would be followed by an offer to existing shareholders from Australia and New Zealand to participate in a share purchase plan (SPP), which would be capped at $50million.
What will be raised from the institutional placement and the SPP will be used to reduce the debt from the company’s purchase of Saputo Dairy Australia’s dairy processing facility in Koroit and to improve the company’s financial flexibility.
The Australian Financial Review reported Bega Cheese had $245.4million net debt as of June 30, and still had to pay for its Koroit facility.
“Bega Cheese has always had a commitment to maintaining a strong balance sheet and this capital raising ensures we are appropriately geared should further opportunities arise,” the company’s executive chairman Barry Irvin said in Tuesday’s ASX announcement.
READ MORE: Bega Cheese buys Koroit milk plant
The Koroit facility in Western Victoria was purchased for $250million in July. Mr Irvin said it was in a region with access to a milk pool of around 2billion litres.
“Operationally it adds substantial flexibility to our business together with a highly qualified team producing a desirable product portfolio of bulk and retail butter, growing up milk powers, specialised nutritional powders and commodity powders,” he said.
“We are already working hard to utilise the substantial spare capacity and expect to process 420 to 450million litres of milk this season.”
He said other value-adding strategies for the site in the future would also be considered.
The shares issued under the institutional placement will rank equally with existing shares and were expected to begin trading on September 17 at a price of $7.20 per share.
The issue price of shares under the SPP will be $7.10.
In related news, earlier this month Bega Cheese became a substantial shareholder for Capilano Honey Limited, buying 255,951 shares in the company for about $5.38million.
The purchased came during a difficult period for Australia’s biggest listed honey company, as a joint investigation by Fairfax Media and ABC had found Capilano was facing accusations of selling fake honey, a claimed the honey company denied.