Fertiliser and explosives manufacturer Incitec Pivot (IPL) is looking to raise $675 million to strengthen its balance sheet and pursue growth opportunities.
The company’s shares went into a trading halt on Monday to allow the issue to start. The results will be announced today.
IPL will raise $600 million via a fully underwritten institutional placement. It will also raise up to a further $75 million via a non-underwritten share purchase plan to retail shareholders.
The new shares issued under Incitec Pivot’s $600 million institutional placement will cost $2 per share, which is an 8.7% discount to Incitec Pivot’s last closing price on Friday, May 8 of $2.19.
The timing of the issue forced the company to bring brought forward the release of its first-half results from later this week to coincide with the capital raise announcement.
IPL reported a statutory net profit of $65 million, up 22% on the first half of last year which was hit by the impact of the long drought, especially in Eastern Australia. Earnings before interest and tax (EBIT) rose 34% to $159 million.
On the explosives side of the business, Incitec’s results were boosted by significantly stronger production levels in its US operations, and higher sales to the US construction and quarry sector.
Sales of explosives equipment to the mining industry also rose, while the company’s local fertiliser business recorded an EBIT loss of $9.9 million, much better than the $32.5 million loss for the 2018-19 first half (when the result was impacted by the drought and the effects of heavy rain in north Queensland which affected phosphate shipments from its mines near Mount Isa.
IPL’s fertiliser business ended the half with the strong tailwinds thanks to the widespread good rains in late summer and early autumn in most states.
“The business demonstrated strong resilience in the first half as our overall mining volumes continue to be supported by our premium technology offering. We were pleased with our manufacturing performance as we work towards our improved reliability target by 2022, chief executive Jeanne Johns said in a statement to the ASX.
“The fertilisers business was weighed down by record low commodity prices, as well as drought conditions in the first four months. Improved weather conditions have driven record demand over the last three months and we are well placed to benefit from any future improvement in global fertiliser prices,” she said.
