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Reece seeks AUD 600mn
Posted on Tuesday, 07 April 2020 07:29
Reece is the latest Oceanic company going cap in hand to investors for cash to bolster its capital during the coronavirus pandemic as the Australian plumbing giant is raising a total AUD 600.00 million (USD 363.69 million). The business said it decided to take pre-emptive and decision action to fortify its balance sheet and position itself for the future as it will have greater flexibility to accelerate its growth strategy and capitalise on opportunities. It noted the equity offering will reduce pro forma net leverage (net debt to earnings before interest, tax, depreciation and amortisation for the calendar year 2019), as at 31st December 2019, to 1.9x. Total pro forma liquidity - cash on hand plus committed undrawn facilities - is expected to increase to AUD 917.00 million. Reece’s major shareholder, the Wilson family, is fully supporting the actions and has subscribed for AUD 170.00 million-worth of new shares. The group is carrying out a fully underwritten accelerated non-renounceable entitlement offer on a 3:55 basis to raise AUD 232.00 million and has also announced a AUD 368.00 million placement. It is issuing a total 79.00 million new shares at AUD 7.60 apiece, representing a discount of 12.5 per cent to the last trading price of AUD 8.69 on 3rd April and of 11.2 per cent to the theoretical ex-rights price of AUD 8.56. Reece noted plumbing and construction are considered essential services in both Australia and the US and so a majority of its branches and distribution centres in these geographies remain open. As a result, the company has had a solid start to the calendar year and it has observed a shift to investment in home comforts, hot water units and repair and maintenance work. Reece added it has not experienced any material impact on its supply chain as a result of the pandemic at this time. The group’s placement is the 11th-largest capital increase announced by a Oceanic company so far this calendar year, according to Zephyr, the M&A database published by Bureau van Dijk. its rights issue is the region’s 6th-biggest cash call in 2020 to date. © Zephus Ltd