Kiwifruit grower and marketer Seeka plans to raise about $50 million from shareholders to help fund its ongoing expansion.
The firm is offering existing investors the chance to buy one new share for every 1.5 shares held at $4.25 each. That is 25 percent less than the price the shares closed at on Friday, and a 17 percent discount on an ex-rights basis.
The rights offer is fully underwritten by First NZ Capital which is being paid 2.75 percent of the offer proceeds.
“Seeka will use the capital raised to strengthen our balance sheet, repay bank debt, undertake planned capital expenditure and give us greater financial flexibility and freedom to deliver better value for our shareholders,” chair Fred Hutchings said in a statement filed with NZX.
The firm’s shares were recently unchanged at $5.70, down about 13 percent this year.
Te Puke-based Seeka is the biggest kiwifruit producer in New Zealand and Australia. In Australia it also grows and markets nashi and pears, and in New Zealand it grows avocados and kiwiberry (like a bite-sized, smooth-skinned kiwifruit), and imports and distributes bananas.
Earlier this year, the company acquired Turners & Growers’ Northland horticulture business to gain scale and improve efficiencies.
Seeka said it expects to undertake about $32 million of capital expenditure during the 2019 financial year, including upgrades of its processing plants at Te Puke and Kerikeri.
From the end of next year, it wants to hold net debt at 1.5- to 2.5-times long-term maintainable earnings before interest, tax, depreciation and amortisation.
The company last month agreed to sell five of its Northland kiwifruit orchards to new long-term suppliers for $15.9 million. Today it said it was expecting further Northland sales over the next 12 months. This, combined with other initiatives, will help reduce debt during 2019.
The company, which also plans to introduce a grower share scheme early next year, reiterated its operating earnings guidance for the December 2018 financial year at between $24 million and $25 million.
It is picking ebitda to increase to between $27.5 million and $28.5 million in the 2019 year, assuming normal operating conditions in Australia and New Zealand and increased kiwifruit volumes.