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Nuplex CEO John Hirst - Source: ONE News -
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After one false start resin maker Nuplex now looks to be on the way to raising the capital it needs to pay down debt and keep its bankers happy.
Last month Nuplex dropped its initial share placement with institutional investors to raise $100 million to pay down debt after a failure to agree on price.
It then launched a $132 million rights issue with a total of 577 million shares, at 23 cents each.
Since then the company's share price has traded up strongly, although the rights issue has not been without criticism.
"There's a lot of shareholders concerned that they will be diluted through the process," says CEO John Hirst.
"The good news for them is under this process is the dilution, although there is some, it is not as large as the original concept that we had where we were trying to raise the $110 million with a bigger percentage of that as a placement."
With a lack of debtor finance available in the current economic climate Nuplex CEO John Hirst says the company is in a similar position to many other businesses turning to shareholders for help.
He says the cash-raising process is ongoing and is urging existing shareholders to take up their rights issue.
Those that don't, are at risk. According to the Sunday Star Times, a group of institutions sub-underwriting the rights issue have secured a call option giving them the right to buy 99 million shares - or 15% of the company - at 23 cents a share.
"With post-rights shares likely to be worth at least 40c (net asset value per share would be twice that), the exclusive side deal effectively delivered tens of millions of dollars straight into the clutches of a handful of investors," the Sunday Star Times reported.
Hirst told NZI Business the side deal would indeed have a dilutionary effect on existing shareholders. However, the company has no choice.
Meanwhile, Hirst says the company is on track in this quarter and maintains a positive outlook.
'Nuplex will remain profitable, it will have a very strong cash
flow, and inevitably when the markets pick up, we're going to be in
great condition to take advantage of that."
