Costa to return with a raising

Costa Group is expected to reveal not just a profit downgrade when its shares resume trading but also plans to raise equity.

The company entered a trading halt on Monday ahead of what is expected to be an announcement about a hit to its earnings. Now it is believed the group will tap the market, with the shares likely to be lifted from their trading halt on Wednesday.

When releasing its results in August, Costa said it had $304.9m in net debt, which equates to 2.59 times earnings before interest, tax, depreciation and amortisation.

It is understood pricing pressure for blueberries and mushrooms is taking its toll as more competitors enter the market. Costa shares dived on August 23 when the fruit and vegetable grower, packer and marketer posted a 15 per cent fall in net profit for the half year due to challenging weather conditions. The company’s market value sits at $1.1bn.

Paine and Partners owned Costa with family founders before Costa was listed in 2015 at $2.25 a share, equating to a $717m market value.

Costa is Australia’s largest grower, packer and marketer of fresh fruit and vegetables, supplying produce to supermarkets as well as independent grocers and a range of food industry stakeholders. The business also exports to Asia, North America and Europe, growing produce including berries, mushrooms, tomatoes, citrus, table grapes, bananas and avocados across 3500ha in Australia.