Thursday 28th May 2020
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Comvita Limited (Comvita) has today announced its intention to raise approximately NZ$50 million via a NZ$20 million placement (Placement) to institutional investors, together with an approximately NZ$30 million 1 for 4.15 pro-rata accelerated non-renounceable entitlement offer (Entitlement Offer) (together the Offer). The Offer is fully underwritten by Craigs Investment Partners Limited and Forsyth Barr Group Limited.
Chairman, Brett Hewlett said “Comvita has continued to benefit from strong demand for its products as consumers are actively choosing natural products that strengthen immunity. In addition, this year’s Mānuka honey harvest has been very strong in terms of both volume and quality setting us up nicely to meet that strong demand in larger key target markets of China and North America. The business continues to make good progress on its cost out and business transformation programme, trading profitably January through May and paying down debt from improving operating cashflows. The Board believes that now the market conditions have stabalised, it is prudent to undertake the equity raising as foreshadowed earlier in the year to reset the capital structure, build greater resilience in our balance sheet and enable the business, under new the CEO, David Banfield to focus on profitable growth”.
• Comvita is undertaking an approximately NZ$50 million equity raising at an offer price of NZ$2.50 per share via a NZ$20 million underwritten Placement, together with an approximately $30 million 1 for 4.15 underwritten Entitlement Offer to reset its capital structure, build resilience and support its growth agenda.
• Comvita has experienced strong trading performance year to date across most major markets with year-to-date sales up 7%1 on a like-for-like basis and year-to-date gross margin up from 39%1 to 49%.
• Very strong honey harvest season with volume increased 84% and quantity of UMFTM2 10+ up 185%.
• Three point plan to stabilise performance, transform the organisation and build long term resilience and growth well underway, including Comvita’s NZ$15 million business transformation programme.
• The Board believes it prudent to now pursue an equity raising as foreshadowed earlier in the year to reset capital structure, build resilience and position the business to take advantage of future growth opportunities.
• All of the Independent directors and the CEO will be supporting the offer with a minimum combined committed participation of $0.5m
• Comvita continues to be well supported by its debt provider and post capital raise has secured new debt facilities and terms to 1 July 2022
• Post the equity raising, Comvita expects net bank debt / FY20 Underlying EBITDA (per guidance)3 to decrease from 3.6x to 0.9x (as at 30 June 2020).
Equity raising details
The fully underwritten approximately NZ$50 million equity raise comprises a NZ$20 million Placement and an approximately NZ$30 million Entitlement Offer.
Under the Entitlement Offer, eligible shareholders may subscribe for 1 new ordinary share for every 4.15 existing shares held as at 5.00pm (NZST) on the Record Date of Friday, 29 May 2020, at an application price of NZ$2.50 per new share. The application price reflects a 34.4% discount to NZ$3.81, being the last closing price of Comvita’s shares on the NZX on the night prior, Wednesday, 27 May 2020 and a 27.2% discount to the theoretical ex-rights price of NZ$3.43 (TERP)4.
The transaction will be supported by all of the Independent Directors and the CEO who have committed to subscribe for $0.5 million of new shares.
The Placement to institutional investors will raise NZ$20 million at the offer price of NZ$2.50 per share. The Placement comprises the issue of 8.0 million shares to eligible, sophisticated and other institutional investors located in New Zealand, Australia and other selected international jurisdictions. The placement represents 11.5% of Comvita’s ordinary shares on issue following the Entitlement Offer.
Settlement of the Placement is scheduled to take place on Wednesday, 3 June 2020, with commencement of trading of new shares on the NZX on the same day.
Entitlement offer details
The 1 for 4.15 Entitlement Offer will raise a total of approximately NZ$30 million at an application price of NZ$2.50 per share. The Entitlement Offer will be conducted in two parts, a component to institutional investors (Institutional Entitlement Offer) and a component to retail shareholders (Retail Entitlement Offer). The Entitlement Offer is non-renounceable, and entitlements will not be tradeable or otherwise transferrable.
Eligible shareholders under the Institutional Entitlement Offer include sophisticated, professional and other institutional shareholders located in Australia, New Zealand and select international jurisdictions as at 5.00pm (NZST) on the Record Date of Friday, 29 May 2020 (Eligible Institutional Shareholders). The Institutional Entitlement Offer will be accelerated and will close on Thursday, 28 May 2020.
The Retail Entitlement Offer will be offered to eligible retail shareholders with registered addresses in New Zealand as at 5.00pm (NZST) on the Record Date (Eligible Retail Shareholders). The Retail Entitlement Offer will open on Wednesday, 3 June 2020, and close on Friday, 12 June 2020 (unless extended). Provided they have taken up their full entitlement, Eligible Retail Shareholders may also apply for additional new shares not taken up by other retail shareholders up to a maximum of 100% above their pro-rata entitlement. The Retail Offer Document, containing full details of the Entitlement Offer, will be sent to Eligible Retail Shareholders on Wednesday, 3 June 2020.
The rights will not be listed on NZX and there will be no shortfall bookbuild for those entitlements not taken up. Those shareholders who do not exercise their entitlements, or who are ineligible to do so, will have their shareholdings diluted. Retail shareholders who do not use a custodian or nominee to hold their shareholding are strongly encouraged to complete applications online via www.comvitashareoffer.co.nz given the likelihood of delays with the postal system at this time. Those that do apply for shares by postal applications are strongly encouraged to mail their applications as early as possible during the offer period.
Additional information regarding the Offer is contained in the investor presentation accompanying this announcement. The investor presentation contains important information including key risks and foreign selling restrictions with respect to the Offer.
Nothing contained in this announcement constitutes investment, legal, tax or other advice. Investors are encouraged to seek appropriate professional advice before making any investment decision.
For any questions in respect of the Retail Entitlement Offer, please visit www.comvitashareoffer.co.nz or call Link Market Services Limited on +64 9 375 5998 (within New Zealand) between 8:30am and 5.00pm (NZST) Monday to Friday during the Retail Entitlement Offer Period. For other questions, investors should contact their broker, solicitor, accountant, financial adviser or other professional adviser.
Source: Comvita Limited (Comvita)
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