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Nuplex - Source: Nuplex -
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Resin manufacturer Nuplex has confirmed its earnings guidance of $43 million for the second half of 2009 and says a rights issue will be enough to reduce its debt to a manageable level.
Nuplex on Monday lodged the offer document for its $132.8 million rights issue with the New Zealand Stock Exchange and the Australian Securities Exchange.
The rights issue would reduce Nuplex's bank debt to about $275 million at the end of April and would lower the company's gearing ratio from 52.3% to about 37%, and reduce interest costs, the company said.
Nuplex was stung by depreciation in the New Zealand dollar, which saw its foreign currency bank debt increase to $371 million at the end of 2008. At the end of February this year it increased to $400 million.
The debt problems saw its share price crumble from a year-high of $6.47 last September to as little as 35 cents last week.
Its shares rose 2 cents to 53 cents on the sharemarket on Monday.
Monday's offer document reiterated the company's earlier guidance of ebitda (earnings before interest, tax, depreciation and amortisation) of about $43 million for the second half of 2009.
It also confirmed that, in the opinion of the directors, the funds raised through the rights issue would be enough to meet Nuplex's medium-term capital needs.
The resins and chemical maker wants to raise the $132.8 million of new equity capital through a pro-rata renounceable rights issue of new shares to existing Nuplex shareholders.
The rights issue would be fully underwritten by First NZ Capital Securities and had received sub-underwriting support from a broad range of institutional and habitual investors, Nuplex said.
Under the rights issue, shareholders would be offered seven new shares for every one existing share, at an issue price of 23 cents a share.
"We believe that long-term prospects for Nuplex are sound and the fully underwritten rights issue represents an attractive opportunity for shareholders to acquire further shares," said chairman Robert Aitken.
"The entitlements are valuable and if shareholders do not either accept the offer or sell their rights, this value will be forfeited. We therefore encourage shareholders to read the offer document when received and consult their stockbroker or financial adviser."
The offer will be mailed to shareholders on April 2 and closes on April 20.
Nuplex continued to trade profitably and was well positioned in its markets, with the majority of products being essential inputs to customers' manufacturing processes, said managing director John Hirst.
Nuplex had a global presence, with operations in 10 countries across Australasia, Europe, North America and Asia, and more than 50% of revenue comes from outside Australasia, he said.
"Like most manufacturers, we are exposed to global economic conditions, the restructuring programmes we have already activated will reduce operating costs. Margins are also expected to increase due to lower raw material costs."
