Originally Posted by
Allied Farmers Announcement
as at 09:53:39, Tuesday 03 August, 2010 (NZT)
GENERAL: ALF: Allied Farmers Seeks $19.30 million
ALF
03/08/2010
GENERAL
REL: 0953 HRS Allied Farmers Limited
GENERAL: ALF: Allied Farmers Seeks $19.30 million
Allied Farmers Seeks $19.30 million
Allied Farmers today announced a partially underwritten $19.30 million
capital raising as the company seeks further cash injections to achieve
longer term business plans and reduce debt.
The capital raising, which has been partially underwritten by McDouall Stuart
Group Limited for $9 million, will consist of two parts:
An institutional placement raising $2.25 million at 2.5 cents per new share;
and
A rights issue to current Allied Farmers shareholders entitling
them to 1 new share at 2.5 cents for every 3 shares held.
Allied Chairman John Loughlin said McDouall Stuart had today arranged a
placement of $2.25 million to a number of institutions and professional
investors, which when combined with the underwritten component of the total
capital raising would mean that at least $9 million would be raised.
"I am also encouraging our current shareholders to take up their rights, not
only to support the business and its future plans, but also to avoid any
dilution effect from the capital raising".
"In raising any capital we are mindful of the interest that has been shown by
a number of our investors in supporting the company. We have decided that the
rights issue with a placement is the best current option for us to bring in
fresh capital to launch some of our planned initiatives and gives us the time
needed to realise good value from our asset portfolio, and continue our focus
on reducing debt. We are conscious of giving existing investors the
opportunity to further invest in the company and believe rights issues are
the appropriate format to look after the interests of existing investors."
The new shares will be offered at 2.5 cents per share, which represents a
discount to Allied Farmers' current share price of approximately 5.5 cents
per share. In addition, to protect investors in the capital raising from any
future erosion in the net tangible assets of Allied Farmers, the number of
shares issued will be increased next year if the Group's net tangible assets
are less than the issue price at the June 30, 2011 financial year end. The
details of this adjustment mechanism will be set out in the prospectus.
John Loughlin said that given the continuing challenges in the rural and
finance sectors, coupled with the current market for the realisation of the
ex-Hanover and United assets, we felt it appropriate to recognise and protect
the downside risk for investors.
As an additional benefit, the rights to new shares will be renounceable. This
means that shareholders who do not wish to subscribe for more shares can sell
their rights, which may have a value, through the NZX rights trading
facility. However, for those shareholders who want to invest more than
their entitlement, provision has been made for oversubscriptions (allowing
shareholders to apply for additional new shares).
Allied Farmers has also, subject to compliance with its placement rights
under the Listing Rules, provided the sub underwriters with a right (but not
obligation) to apply for any shares not taken up in the offer or committed
under the underwriting.
Mr Loughlin said, "Allied Farmers' expects the finance sector and asset
values to recover in time and the recently completed sale of Five Mile, for
close to its latest valuation, demonstrates what Allied Farmers can achieve
from the former Hanover assets. However, in a market in which demand and
finance for property development was flat, realising good value from further
asset sales would continue to take time."
"We continue to seek opportunities for realising value from those assets and
we have a number of initiatives planned for our rural services businesses
that will differentiate our business and stimulate our market share."
"It will take time to fully realise that value, attract fresh capital to
implement initiatives and reduce debt levels. The recent extension to our
banking arrangements with Westpac, albeit with restructuring and capital
raising milestones that are required to be met, signalled confidence in our
plans, which we too are confident provide a solid foundation for our future
growth."
"We are seeing some signs of recovery in the rural sector - especially on the
back of the dairy payout - and we have confidence that the rural services
sector, including the finance sector, will recover. But that recovery will
also take time."
Mr Loughlin expected the prospectus to be lodged early next week with the
document in the mail to shareholders from about 11 August.
Media Inquiries to:
Malcolm Boyle/Alan McDonald
Star Public Relation
Allied Farmers
09 912 7827 or 021922 022 or 0212 813 004
Rob Alloway
Manager Director,
09 912 7827 or 021922 022 or 0212 813 004 021 376642
Offer Timetable
10 August Record date for Rights Issue Entitlements
11 August Offer opens and prospectus mail out begins
24 August Rights trading ceases on NZX
30 August Closing Date for Offer
6 September Allotment of new shares and statements issued
6 September New shares begin trading on NZX
End CA:00197953 For:ALF Type:GENERAL Time:2010-08-03:09:53:39
Allied Farmers Seeks $19.30 million
Reply With Quote
Bookmarks