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Warehouse shareholders cool on last tranche of $115mln capital raise

Thursday 10th April 2014

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Warehouse Group, New Zealand's largest listed retailer, has completed a $115 million capital-raising, although the final $15 million tranche offered to shareholders was not fully taken up.

Underwriters Deutsche Craigs took $4.2 million of the $15 million of shares offered in a share purchase plan that tops up a March 6 placement of $100 million in new shares.

The funds are being raised to strengthen the retailer's balance sheet as it prepares to buy the Diners Club New Zealand business for $3 million and beef up its wider financial services offering, as part of a plan to get half its earnings from areas other than its core 'Red Sheds'.

Warehouse is following retailers including Target Corp and Tesco as it aims to boost earnings from selling financial services and help the estimated 1.5 million people who come through its doors every year buy more products.

The share purchase plan was made up largely by eligible investors, who all up spent $10.8 million while the balance of $4.2 million taken up by the underwriter, Deutsche Craigs Limited, the retailer said in a statement. Last month the company halted trading as it raised $100 million from selling shares at a then discounted rate of 10 percent at $3.23 per share.

Shares in the retailer rose 0.3 percent to $3.21, and have declined 14 percent this year, underperforming the NZX 50 Index's 8 percent gain. The stock has an average recommendation of "hold" according to seven analysts surveyed by Reuters, with a median price target of $3.65.

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