Bellamy’s red-faced at refund

BELLAMY’S will allow retail shareholders who took part in the infant formula company’s latest $60 million capital raising to get a refund in the wake of an embarrassing regulatory setback.

However, investors might pause before handing back their stock after the company yesterday also upgraded its profit guidance.

Bellamy’s, whose shares have been suspended since July 7, said yesterday that to ensure compliance with the Corporations Act it had issued a supplementary prospectus that would allow retail investors to claim back the $45.5 million raised three weeks ago and then return their stock.

The decision was triggered by news that shortly after Bellamy’s had used the capital raised in the rights issue to buy Camperdown Powder in southwestern Victoria, the cannery’s licence had been suspended by China’s Certification Accreditation Administration.

Bellamy’s had been discussing the issue with its lawyers for the past week and now deems the suspended licence to be a “material issue”, and will therefore allow a refund.

The $45.5 million raised, along with $15 million from institutional investors, was used to purchase a 90 per cent stake in Camperdown Powder and renegotiate a key supply deal with dairy giant Fonterra.

Bellamy’s shares last traded at $6.74 and are expected to fall once the suspension is lifted – potentially below the $4.75-ashare price paid in the rights issue. Bellamy’s said it now expected its second-half earnings to come in at the upper end of guidance.