Heartland raises $20 mln from institutions at 4.6% discount; trading halt lifted

Tuesday 13th December 2016

Heartland Bank's trading halt has been lifted after the bank raised $20 million from institutional investors at $1.46 per share, a 4.6 percent discount to the last trading price.

The bank said yesterday that it wants to raise up to $30 million through a combination of the bookbuild and a share purchase plan which will offer New Zealand-resident shareholders up to $15,000 worth of shares each. The funds raised will help maintain the lender's capital ratio after a period of strong credit expansion and also support its digital strategy.

Heartland said the final terms of the share purchase plan will be announced after its first-half earnings are published in February, but noted the shares will be offered at a discount. Following this, the bank may issue Tier 2 capital "with a view towards optimising its capital position," it said.

Yesterday's institutional placement "was well supported by Australian and New Zealand investors and we welcome a number of new investors to our register as a result," Heartland said. Settlement and allotment of the new shares will occur on Dec. 15.

Heartland has to hold capital equal to 10.5 percent of its risk-weighted assets, and a $30 million equity raise will strengthen its capital ratio as of Nov. 30 by about 0.9 percent, according to its investor presentation. The bank's capital ratio declined to 12.42 percent in November from 13.78 percent in June and 12.71 percent in November.

The bank affirmed its annual guidance for net profit of between $57 million and $60 million. It boosted annual profit 12 percent to $54.2 million in the year to June 2016.

The shares last traded at $1.53 before being halted yesterday and have risen 16 percent this year.

BusinessDesk.co.nz

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