As expected, Wesfarmers is going to ask shareholders for a lot of money: $2.57 billion in a rights issue to complete the refinancing of the bridging finance the company took out to fund its takeover of Coles last year.
It told the ASX that the issue will be made at $29 a share in the ratio of one new share for every eight shares they own. Holders of the partly paid shares issued as part consideration for Coles will be allowed to participate in the offer.
WES shares were halted last Thursday morning with the price at $36.97 for the fully paids. The shares will remain suspended until next Monday to allow the company to complete the issue to institutions.
Wesfarmers said in yesterday’s statement that it had funding commitments in place to refinance all of the $4 billion bridging facility.
The company also says it expects to pay $2 per share in dividends in fiscal 2008 and 2009.
The remainder of the refinancing has been covered with a $US650 million five-year bond issue, announced on April 4, and by refinancing $800 million of the bridging loan until December 2009,
Wesfarmers said it had also renewed its $1 billion working capital facility. So that’s $5 billion in all that’s been refinanced.
New shares issued under the offer will be entitled to receive the final dividend for fiscal 2008, which is expected to be at least $1.35 per share.
CEO, Richard Goyder said in yesterday’s statement that "The integration of Coles is largely complete.
"We continue to have a high level of confidence regarding the opportunity to generate shareholder value by substantially enhancing Coles’ earnings. Earnings from the Resources division are expected to increase substantially in FY09 due to the increase in market prices for export coal currently being negotiated and the remainder of our businesses are performing in line with our expectations."
"New Wesfarmers Ordinary Shares equal in number to those not taken up by Eligible Shareholders and those which would otherwise have been offered to Ineligible Shareholders will be placed into an underwritten institutional or retail bookbuild as applicable."
The company said that any premium above the Offer Price achieved in these bookbuilds will be remitted to those relevant shareholders on a pro-rata basis. The Entitlements will not be tradeable on the ASX nor otherwise transferable.
ABN AMRO, Deutsche Bank, Goldman Sachs JBWere, JPMorgan, Macquarie Capital Advisers and UBS have been appointed joint lead managers and have fully underwritten the Entitlement Offer. Wesfarmers is being advised by Gresham Advisory Partners and Allens Arthur Robinson.
