Wellard Limited has announced a fundraising initiative to raise approximately $52 million to replenish working capital.
In a statement to the ASX, Wellard CEO Mauro Balzarini said the raised funds will enable the company to focus on taking advantage of any changes to the commercial trading environment in live cattle exports.
“Following a prolonged period of very difficult trading conditions with reduced margins and cash flow, we needed to bolster the Company’s working capital position to enable the Company to negotiate better trading conditions, and strengthen the balance sheet, as well as improving our overall liquidity,” Mr Balzarini said.
“Whilst demand from traditional markets has eased due to higher price pressure, Wellard believes volumes can return to historic levels with price reductions in Australia.
“As we expect an improvement in cattle supply over time, we need to be ready to capitalise on our competitive advantages in the marketplace if and when this eventuates,” he said.
The statement said the fundraising will be comprised of:
- a placement of 25 million new shares to sophisticated and institutional investors at $0.24 per share to raise $6 million (Placement);
- a fully underwritten non-renounceable pro rata entitlement offer on a 1-for-4 basis at an issue price of $0.185 per share to raise approximately $19.7 million (Entitlement Offer); and
- the issue of US$20 million in convertible notes (Convertible Notes) to raise approximately $26.3 million.
Under the Entitlement Offer, Eligible Shareholders will be able to subscribe for one new share for every four existing shares they hold at an issue price of $0.185 per share.
The offer price represents a 24pc discount to the volume weighted average trading price (VWAP) for the 15 days trading to 31 March 2017 (inclusive) of $0.245.
The Entitlement Offer is fully underwritten by Hong Kong Fulida International Trading Company Limited, Black Crane Capital Limited, Tradeinvest Asset Management Company (BVI) Ltd and Heytesbury Pty Ltd, and by the partner of Mr Balzarini, Giovanna Boventi Faroni.
“The quality of our underwriters demonstrates their long-term faith in the Wellard business,” Mr Balzarini said.
The statement said the Company will use the funds raised from the Offers and the Placement (after costs) for the purchase of the remaining 50pc stake of the Wellao Agriculture Co., Ltd (China) (Wellao) from Fulida and working capital purposes.
Full details of the offer can be read on the ASX website here