New Zealand's Fletcher Building to raise $435 million amid financial struggles (updated)

Fletcher Building

22/09/2024 22:08

(Adds details and background from paragraph 2)
       Sept 23 (Reuters) - New Zealand's Fletcher Building
 FBU.NZ  said on Monday it would raise NZ$700 million ($435.61
million) in a move to improve financial stability due to legal
woes and weak market conditions.
    The equity raise, which includes a NZ$282 million
institutional placement and a NZ$418 million non-renounceable
entitlement offer, is priced at NZ$2.40 per share, which
represents a 17% discount to Fletcher's last closing price.
        The equity raising will ease short-term pressure on
Fletcher Building to sell assets below value, allow it to focus
on operational performance, and reduce leverage to support its
investment-grade credit rating, it said.
  
        In August, the company 
    offloaded
     its Australian plumbing supplies division Tradelink for
A$170 million ($115.55 million), but still has to allocate
NZ$155 million to cover legal liabilities related to 
    Iplex pipe failures
     in Western Australia.
  
        The troubled construction and materials company has also
seen its top executives 
    step down
     in recent months as it struggles with cost blowout, weak
earnings and declining share prices.
  
        "With a strengthened balance sheet, the company can
focus on executing key operational initiatives in preparation
for a market recovery," CEO Andrew Reding said in a statement. 
  
        The Auckland-based construction company also announced a
target of achieving NZ$180 million in gross overhead cost
savings by fiscal year 2025.
  
        
  
        
  
($1 = 1.6069 New Zealand dollars)
($1 = 1.4712 Australian dollars)

 (Reporting by Roshan Thomas in Bengaluru
Editing by Chris Reese and Marguerita Choy)
 ((Roshan.Thomas@thomsonreuters.com;))