The company’s shares were halted on the NZ and Australian stock exchanges while a book-build was conducted to price an underwritten $40m share issue to institutions. A $3m share purchase offer to existing shareholders is also planned.
A2 has set a floor-price of 67c for the book-build, and both sets of investors will pay the same price. The shares had traded at 72c on the NZX ahead of the announcement.
The share issue would mainly provide working capital for the growth of infant formula sales in the Australia-NZ and China markets, managing director Geoff Babidge said. Infant formula had become a bigger growth driver for the company than expected.
Though A2 has taken on a debt facility for up to A$10m and is seeking a further bank guarantee for up to NZ$10m, it was intent on keeping a conservative capital structure. It had no borrowings at its June 30 balance date.
The Australia fresh milk market has been A2 core business until now, using cashflows from there funding the new businesses, with a 40% sales growth rate and record sales in Australia last year. In the recent annual report, chairman David Hearn said the group planned an aggressive approach across its business markets.
