New Zealand's Fletcher Building announced a NZ$1.25 billion ($920 million) refinancing plan and the proposed sale of its Formica and steel roofing tiles business on Tuesday, while dismissing a report it had become a takeover target.
"Reducing our net debt also provides us with the opportunity to undertake divestment processes for Formica and the Roof Tile Group on terms that should maximize shareholder returns".
"In conjunction with the offer, Fletcher Building has also established a new standby banking facility of $500m with ANZ, MUFG Bank and Westpac", it said.
"Wesfarmers has confirmed to Fletcher Building that it does not hold shares in Fletcher Building", Taylor said on a media call.
Not so. Cost increases on Fletcher's huge SH1 Puhoi to Auckland motorway extension joint venture mean the company is now forecasting it will make no profit at all on the five-year construction project, business commentator Rod Oram told Radio New Zealand's Nine to Noon programme this morning.
"An outcome of the work that we have completed to date on the group strategy is that it is now appropriate to strengthen our balance sheet", Taylor said.
The company's shares were placed on a trading halt as it worked out the details of the capital raising. The standby facility may only be used to repay holders of its $1.1 billion of notes in the United States private placement market, who have yet to agree to new terms following the covenant breaches. However, discussions with noteholders in the USPP market "are ongoing and Fletcher's objective and expectation is that it will achieve a mutually acceptable outcome", the company said.
Although it doesn't expect to need the new standby facility, it and the rights issue proceeds are sufficient to redeem all its USPP notes and to cover any associated costs. The offer comes as a result of the company's strategic review, undertaken by new chief executive Ross Taylor. Fletcher's net debt would reduce to $1.5 billion from $2.26 billion as at March 31, it said.
Fletcher's reconfigured capital structure had provided a "permanent solution" to the firm's breaches of its syndicated lenders agreement and it expected to wrap up its negotiations with it's USA lenders by May 31, Taylor told media.
Fletcher says there is no change to its estimated operating loss for B+I of $660m in the year ending June, or for its forecast of earnings before interest and tax (ebit) of $680-720m excluding the B+I loss.
The institutional entitlement offer will be made today and tomorrow while the retail part of the offer will open on April 23.