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Bega capital raising seeks $250m to cut debt after Koroit, Capilano spending

Zoom in font  Zoom out font Published: 2018-09-12  Views: 13
Core Tip: Bega Cheese is offering ordinary shareholders the chance to buy up to $15,000 in new shares, at a discount, as part of a $250 million capital raising to help bolster its books after its big Koroit dairy factory purchase.
Bega Cheese is offering ordinary shareholders the chance to buy up to $15,000 in new shares, at a discount, as part of a $250 million capital raising to help bolster its books after its big Koroit dairy factory purchase.
 
The fast-expanding dairy and food company has just secured $200m in institutional funding towards the capital raising, releasing 27.8m shares at $7.20 each –  a five per cent discount to the company’s share price late last week.
 
Retail shareholders can apply for their quota of a further $50m worth of shares selling at $7.10 each.
 
Bega, which paid $250m for the former Murray Goulburn plant at Koroit in south western Victoria from Canadian dairy heavyweight, Saputo, aims to process up to 450m litres at the site this financial year.
 
The butter, milk powder and nutritional powder production site was receiving 300m litres/year when Bega took over last month.
 
It is expected to generate earnings before interest tax and amortisation of at least $20m in 2018-19.
 
It sits in one of Australia’s most productive dairy regions where milk production totals about 2 billion litres annually.

Executive chairman, Barry Irvin, said the company was working hard to utilise “substantial” spare capacity at Koroit, including looking at other value-added product strategies to introduce at the plant.

This week’s capital raising initiative coincides with Bega also becoming the second biggest shareholder in the nation’s biggest honey brand, Capilano, after paying up to $21 a share.

However, despite speculation about his longer term ambitions in the honey market, Mr Irvin said there were no definite plans about Capilano beyond Bega taking a nine per cent stake in the business.

“It is about just making sure our company has flexibility, but we've made no decision on Capilano," he said.

The $250m capital raising would ensure Bega was appropriately geared “should any further opportunities arise”, after paying down debt.

“Bega Cheese has always had a commitment to maintaining a strong balance sheet,” he said.
 

 
 
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