As previously announced, agricultural chemicals group, Nufarm has launched a $250 million equity raising.
The issue was foreshadowed when Sumitomo Chemical of Japan agreed to take a 20% stake in Nufarm, which enabled the company to escape its second Chinese takeover bid in two years.
Details were announced to the ASX yesterday as well as confirmed earnings guidance for the rest of the financial year.
Sumitomo completed its tender offer for the 20% stake last week and 81% of Nufarm shares were offered.
The offers were scaled back and now the equity issue will occur.
Nufarm said Sumitomo Chemical had confirmed its intention to take up its full entitlement under the entitlement offer, enabling Sumitomo to maintain its stake at 20%.
Under the fully underwritten accelerated renounceable entitlement offer, shareholders will be entitled to subscribe for one new Nufarm share for every five existing Nufarm shares at $5.75 per new share.
The offer price represents a 25.8% discount to the closing price of Nufarm shares on Tuesday of $7.75.
The shares will fall towards the $5.75 level once the main part of the issue is completed.
Nufarm said the funds would be used to strengthen its balance sheet and would place the company in a better position to pursue growth opportunities.
"There is a significant medium to long-term benefit arising from the company’s ability to pay down debt from proceeds secured in the capital raising," Nufarm managing director, Mr Doug Rathbone, said in a statement to the ASX.
"A stronger, more flexible balance sheet will ensure Nufarm is better positioned to support the ongoing growth of the company."
Mr Rathbone will renounce his entitlements consistent with his intention of reducing his shareholding in Nufarm.
But Mr Rathbone said he had no intention of selling more Nufarm shares within the next six months.
Nufarm expects to announce the outcome of the institutional component of the entitlement offer to the share market on April 23, 2010.
Nufarm shares will remain in a trading halt until then.
Nufarm also on Tuesday confirmed its previous guidance for full year net operating profit and estimated net debt and gearing levels.
"In confirming its guidance, the company has taken account of the most recent trading conditions," Nufarm said.
"The company expects a recovery in earnings during the second half of the financial year, with key selling seasons now underway in Australia and Europe, and poised to commence in North America."
In March, Nufarm reported a first half loss of $40 million for the six months to January 31, 2010, mainly due to losses associated with having to sell discounted glyphosate into over-supplied markets around the world.
