Blackmores seeks $117m cash tonic

VITAMIN producer Blackmores has announced an equity raising of up to $117 million to strengthen its balance sheet during the coronavirus crisis, but executive director Marcus Blackmore won’t be participating.

The company will undertake a $92 million institutional placement fully underwritten by Goldman Sachs Australia and a share purchase plan of up to about $25 million.

The institutional placement will be at $72.50 a share, an 8.1 per cent discount to yesterday’s closing price of $78.85.

Chief executive Alastair Symington said COVID-19 was driving increased demand for Blackmores’ immunity products.

“However, immunity products constitute a small part of the portfolio and benefits are offset by a lag in non-immunity products partly driven by lower shopping traffic,” he said.

The company said it was still expecting to make $17 million to $21 million in profit after tax for the year, reflecting higher costs with manufacturing and other factors associated with COVID-19.

Blackmores did not pay a dividend in March and had to seek permission from its lender to increase its debt-to-earnings ratio through to June 2021. Of the institutional placement, $50 million will be used to pay down its $153 million in bank debt, reducing its net leverage to 0.7, while $40 0 million will be set aside to fund nd Asian growth opportunities, including entry into India in FY21. Y21.

The company ny is also looking to divest its non-core brands as well l as surplus land in Warriewood, rriewood, northern Sydney. ey.

Mr Blackmore, more, the son of late founder Maurice Blacklackmore and the company’s biggest ggest shareholder, said aid in the company’s s announcement he was unable to take part in the equity raising ing but “needless to say ay I am absolutely committed mmitted to being a long-term ng-term shareholder”.

Following the placement, he will still hold a 21.5 per er cent stake in the company, ompany, worth about $295 295 million.

Mr Blackmore ore said he would transfer

355,000 of his s shares — worth about ut $27.9 million — to his foundation in the e coming weeks, following ng the example set by his late friend Paul Ramsay of Ramsay Health h Care.

The Ramsay say Foundation is Australia’s tralia’s biggest foundation, with th $3 billion in assets.