Favourable response to Fletcher share offer

Fletcher Building has raised $515 million of its target of $750m in new capital, by tapping into its own institutional shareholders.

It is now turning to its retail investors to make up the difference.

The firm needed to raise more money after racking up huge losses on 16 large commercial building projects.

Fletcher Building shares resumed trading at $6.10 on Friday morning, down from $6.27 when they were put in a trading halt earlier in the week. They ended the day at $6.15c.

Hamilton Hindin Greene investment adviser Grant Davies said the immediate momentum of the share price, which rose seven cents in early trading, indicated the market was ‘‘reasonably pleased’’ with the fact that Fletchers was ‘‘taking it on the chin, raising capital, and shoring up their balance sheet’’.

The share offer to existing institutional shareholders, at $4.80 a share, announced on Tuesday, attracted ‘‘strong support’’ from KiwiSaver fund managers and other institutional investors. Investors then paid $6.15 in a bookbuild to clear the leftover entitlements.

Existing Fletchers retail investors can buy new shares at the discounted rights-offer price of $4.80 from today, as part of efforts to raise the remaining $235m.

The money raised will be used to repay $714m of debt and $25m for the cost of the capital raising.

Fletcher Building has been renegotiating with its creditors after breaching the covenants on its bond issues and defaulting on loans, issues that have contributed to the company reaching its lowest share price since 2010 at one point.