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Mercer shareholders approve rights issue

Friday 17th December 2010

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Mercer Group shareholders approved the company's plans for a capital raising at the annual meeting today.

The stainless steel manufacturer is raising $9 million via the rights issue, which is fully underwritten by Murray Capital's Rakaia Fund and by Christchurch financier Humphry Rolleston's Asset Management Ltd. A prospectus will be issued on January 17.

Rolleston and Stuart Heal were reappointed as directors at today's meeting.

Allan Hubbard and Jean Hubbard and their associated interests collectively hold 45.13% of Mercer but their assets are in statutory management, making a shortfall on the rights issue likely.

The money raised is being used to reduce the company's loans from Westpac, Gresham Finance and Paul Hewitson, one of the company's directors.

A report prepared by Simmons Corporate Finance said the rationale for the rights issue is sound and its structure is reasonable and that in the current environment alternate sources of funding are unlikely to be available to the company in the near future.

The report said that if the rights issue does not proceed, Mercer may not be able to maintain its banking facility with Westpac. Mercer had $8 million owing to Westpac under the facility at September 30.



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