Bega Cheese has raised around $200 million from an institutional share placement and will now look to raise up to $50 million more through a share plan purchase offer to retail shareholders.
Bega said yesterday the proceeds from the issues “will be used to reduce debt following the acquisition of the Koroit milk plant in western Victoria and improve Bega Cheese’s financial flexibility to take advantage of future growth opportunities in dairy and food.”
The previous announcement of the issue on Tuesday failed to mention the purpose of the issue.
Bega shareholders took the news in their stride, the shares eased just 5% to $7.15 when trading resumed on the ASX on Wednesday. That was only 5 cents under the issue price of $7.20 a share.
Bega Cheese’s Executive Chairman, Mr. Barry Irvin, said in yesterday’s statement: “Bega Cheese has always had a commitment to maintaining a strong balance sheet and this capital raising ensures we are appropriately geared should further opportunities arise.
“It has again been a significant year for Bega Cheese with the acquisition of the Koroit Facility from Saputo Dairy Australia for A$250 million. We are very pleased with the acquisition. The Koroit Facility is located in one of Australia’s prime dairy regions with access to a milk pool of around 2.0 billion litres,” he said.
“Operationally it adds substantial flexibility to our business together with a highly qualified team producing a desirable product portfolio of bulk and retail butter, growing up milk powders, specialised nutritional powders, and commodity powders.
“We are already working hard to utilise the substantial spare capacity and expect to process 420 to 450 million litres of milk this season. We also intend to consider other value-adding strategies for the site in the future.”
Bega said 27.8 million new fully paid ordinary shares, were placed at $7.20 a share, a 5.0% discount to Bega Cheese’s closing price of $7.58 on September 7, 2018.
The share purchase plan will see all eligible Bega Cheese shareholder at 7.00pm (AEST) on September 7, 2018, able to subscribe for up to $15,000 of new Bega Cheese shares, subject to scale back, without incurring brokerage or transaction costs.
(Eligible Bega Cheese shareholders are holders of fully-paid ordinary shares in Bega Cheese and whose address on the share register is in Australia or New Zealand (provided that such shareholder is not in the United States or acting for the account or benefit of a person in the United States).
The issue price of the new Bega Cheese shares under the plan will be $7.10, a 10 cents a share discount to the issue price under the Institutional Placement and 6.9% discount to the 5-day volume weighted average price of $7.63.
