The embattled Australia and New Zealand building materials company Fletcher Building is proceeding with equity raising plans which will be announced on Monday, months after its former management reassured investors a cash call was off the table.
DataRoom reported in February that the market was anticipating a raise, a move swiftly dismissed by the loss-making group, but investors priced in the risk to its share price.
The Weekend Australian revealed that a raise was being assessed through investment bank Jarden. Investors were being asked for between $500m and $800m with the deal being signed off by the board and finalised Sunday night with the price of $NZ2.40 per share penciled in and the unconfirmed raise size at $NZ700m.
In August, Fletcher Building confirmed DataRoom reports on July 29 that a capital partnership or joint venture was being explored for its residential development land, which would net $500m. However, it is understood to have been tough going finding a buyer.
It sold its Australian plumbing supplies business Tradelink for $170m to Metal Manufactures, through Miles Advisory, and will provision $NZ155m for its dispute over its Iplex pipes failures in Western Australia.
Investment banks including Barrenjoey have been putting together pitch books to prospective buyers such as private equity firm Lone Star, but the unknown cost of the Iplex dispute has been a deterrent.
Fletcher Building has suffered losses, profit downgrades and cost blowouts on construction projects amid a tough market and a weak New Zealand economy.
Various directors and members of senior management have left, including its chief executive and chairman.
In May, Simon Mawhinney, the managing director of Fletcher Building’s largest (14.1 per cent) shareholder, Allan Gray, said he did not believe a raise was necessary.
At June, the group’s net debt was close to $1.8bn, which is close to its market value, but its banks have been supportive.
Shares last traded at $2.60.
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