Bellamy's Confusion Leaves Sour Taste
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Shareholders in dairy group, Bellamy’s were blindsided last week when, during the company’s current fund raising, Chinese authorities cast doubt on the ability of the company to use a newly acquired Melbourne plant to keep supplying the China market.
That saw the company’s share suspended at its request to allow it to find out just what was the case with its Campbedown facility in Melbourne and the likely impact on the company’s performance.
Yesterday the company delivered a surprisingly upbeat earnings outlook and confirmed it will allow retail shareholders to pull out of its recent capital raising.
Bellamy's issued a two page supplementary prospectus that allows retail shareholders to hand back shares issued from the offer and have their cash returned.
Bellamy’s said any shortfall created by retail holders wanting their money back would be mopped up by two of the company’s major shareholders, Janchor Partners and Delta Partners.
Janchor founder and chief investment officer John Ho is also Bellamy’s chairman.
Bellamy’s shares last traded at $6.74 before the halt asked on July 7. That’s well above the $4.75 per share entitlement offer for its $60.4 million capital raising.
The retail component of the raising was $45.5 million.Because Bellamy’s put its shares in a trading halt just hours before the shares issued through the retail capital raising were due to trade, it has been forced to offer a facility that allows investors to pull out.
The $45.5 million raised, along with $15 million from institutional investors, was used to purchase a 90% stake in Camperdown Powder and renegotiate a key supply deal with Kiwi dairy giant Fonterra.
Bellamy’s requested the trading halt on Friday, July 7 (and later, a suspension) after Chinese authorities suspended a key licence for the recently acquired Camperdown Powder facility in Melbourne.
In its update, Bellamy’s said second half earnings, before interest and tax would be at the upper end of guidance driven by improved sales performance.
“The company's sales and profitability have improved and Bellamy's revenue is expected to be approximately $121 million for 2H17 resulting in full year revenue for FY17 of approximately $239 million," the company said.
Bellamy’s confirmed late yesterday that it had submitted a complete and comprehensive response to the China’s regulatory issues with the Camperdown Powder cannery and supplied supporting documentation.
Bellamy’s says it will work closely with Australian trade officials and the Commonwealth Department of Agriculture and Water Resources to rectify the licence suspension.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.