First $500m raised in Fletcher rebuild
Troubled construction giant Fletcher Building has raised $500 million in one day after what it said was ‘‘strong support’’ from existing shareholders for its rights offer.
Earlier this week Fletcher asked shareholders to inject $750m into the business in a bid to strengthen its balance sheet following disastrous losses on 16 high-profile construction projects, including SkyCity’s International Convention Centre in Auckland.
The company made the announcement on the New Zealand stock exchange on Wednesday afternoon.
Mum and dad investors can buy a limited number of new shares at the discounted rights-offer price from Monday, April 23.
The $500m was raised from institutional investors including KiwiSaver fund managers. From Monday it is seeking a further $250m from ordinary retail shareholders.
After announcing the capital raising to the NZX, Fletcher chief executive Ross Taylor expressed relief that Australian company Wesfarmers was not engaged in a takeover bid for Fletcher while the capital raising was under way.
‘‘It’s obviously easier not to have a takeover going on in the background,’’ Taylor said.
‘‘An outcome of the work that we have completed to date on the group strategy is that it is now appropriate to strengthen our balance sheet.
‘‘Reducing our net debt also provides us with the opportunity to undertake divestment processes for Formica and the Roof Tile Group on terms that should maximise shareholder returns.’’
The company has been negotiating with its creditors after breaching the covenants on its bond issues.
Taylor said Fletcher Building was strengthening its balance sheet to ‘‘enable a permanent solution’’ to its current bank and US loan defaults.
It would raise $750m through a fullyunderwritten pro rata entitlement offer, and establish a new ‘‘standby’’ banking facility of $500m, which may be needed if an agreement could not be struck with the company’s US debt backers, and they demanded their money back.
Taylor also signalled that asset sales would go ahead.
The trading halt for Fletcher shares will lift today.