Comvita shortfall bookbuild priced at 7% premium

Wednesday 17th December 2014

Comvita, the Te Puke based maker of health products based on manuka honey, raised $24.4 million as strong demand in the yesterday's shortfall bookbuild saw investors pay a 7 percent premium to the rights issue.

The 1.29 million shares offered to investors who weren't eligible to take part in Comvita's 1 for 5 rights issue received strong demand, leading to "heavy pro rated scale for all bidders at $3.80 per share," higher than the $3.55 paid by shareholders who exercised 5.6 million of the 6.9 milion rights on offer, the company said in a statement. The 25 cents difference will be paid to holders of unexercised rights in proportion to their holdings, once transaction costs of 0.25 percent are deducted.

The capital raising "will enable Comvita to repay bank debt incurred to complete recent acquisitions and infrastructural projects as well as providing the company with the balance sheet flexibility to pursue further acquisitions that fit within Comvita's investment criteria," chairman Neil Craig said. "This shows Comvita's business strategy and growth prospects are well understood by the market."

The company last month posted a first half loss of $3.3 million, smaller than it had forecast, and reminded the market that it typically derives most of its earnings in the second half of the year.

The shares were unchanged at $3.65, and have increased 2.4 percent this year. The stock is rated a 'hold' by the one analyst tracking it and compiled by Reuters data, with a price target of $3.64.

BusinessDesk.co.nz

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