03/04/2017 - 09:19

Wellard taps investors for $52 million

03/04/2017 - 09:19

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Loss-making livestock exporter Wellard is undertaking a share placement and entitlement offer as part of a $52 million capital raising it hopes will allow it to exploit a predicted improvement in trading conditions.

Wellard taps investors for $52 million
Wellard is the nation's largest live export business.

Loss-making livestock exporter Wellard is undertaking a share placement and entitlement offer as part of a $52 million capital raising it hopes will allow it to exploit a predicted improvement in trading conditions.

The firm, which in March cut its first-half loss by 25 per cent but was still $18 million in the red, on Monday said the $6 million placement, $19.7 million entitlement offer and $26 million capital notes issue were necessary following an extended period of reduced margins and cash flow.

"As we expect an improvement in cattle supply over time, we need to be ready to capitalise on our competitive advantages in the marketplace if and when this eventuates." chief executive Mauro Balzarini said in a statement.

Wellard said it would spend $2.8 million to buy the 50 per cent of Chinese joint venture company Wellao Agricultural Co it does not already own, with the rest of the money used to bolser working capital

Wellao - a 50-50 joint venture with Chinese-owned Fulida Group - plans to build two feedlots and an abattoir to process imported Australian cattle.

The placement of 25 million new shares will be priced at 24 cents per security, with the fully underwritten one-for-four entitlement offer priced at 18.5 cents, representing a 24 per cent discount to the 15-day average trading price.

The entitlement offer will be underwrtitten by several parties, includng Fulida, Black Crane Capital, local agribusiness Heytesbury, and Mr Balzarini's partner, Giovanna Boventi Faroni.

The company said Mr Balzarini will not be taking up his entitlementt, either personally or through his private company and major shareholder WGH Commodities Land and Transport. 

Depending on the take-up of the entitlement offer, Fulida could lift its stake in Wellard from 17.5 per cent to as much as 27.3 per cent.

Fulida executive Kanda Lu plans to join Wellard's board at the conclusion of the entitlement offer while current non-executive director Greg Wheeler will resign.

Azure Capital is Wellard's financial adviser while DLA Piper and Ashurst are legal advisers.

Wellard shares closed down 2.5 cents, or 10.2 per cent, at 22 cents.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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