Freedom Foods Group Ltd (ASX: FNP) announced a $65 million equity raising and acquisition of snack manufacturer Popina today. Freedom Foods has a market cap of $435 million and its stock has lost ~15% year to date.
Entitlement Offer for FNP Shareholders
The $65 million raising will comprise of a retail entitlement offer and an institutional placement. A pro-rata non-renounceable entitlement offer will allow eligible shareholders to purchase 4 fully paid ordinary shares for every 33 existing shares before 7 PM on 26 October 2015. The offer price is set at $2.85 per new share to raise $53 million approximately. The institutional placement is set to raise $12 million approximately at an offer price of $2.85 per new share.
The offer price is set at a 2.5% discount on the average share price over the past 30 days. The stocks offered through the raising are not eligible for the FY15 dividend of $0.015 per share.
Use of Proceeds
The capital raised from the offer will be used for the acquisition of Popina and the construction of a new UHT processing unit at Ingleburn.
The $35 million acquisition of Popina Foods is said to help the company in expanding operations and increasing efficiencies. Popina is a recognised Victoria based cereals and snacks manufacturer with 30 years of experience in the industry.
The new UHT processing facility at Ingleburn will provide material improvement in cost base including processing operations and warehousing and logistics functions. This facility is said to be best in class, aiming to be a vast improvement from its current unit at Taren Point.
The company is plans to achieve additional balance sheet flexibility for future growth opportunities.
Sale of a2MC Shares
Freedom Foods is also set to receive $28 million from the sale of 42.5 million shares in the a2 Milk Company Limited. This sale has reduced the company’s stake from 19% to 10.4%. The proceeds from the sale will be invested into income producing assets that are appealing to the company’s growth strategies.
Author: Matthew Dibb
Oct 21, 2015
Matthew has an extensive track record in equity markets and derivative advisory. Spanning a career in several investment banks and prviate wealth groups including Macquarie Bank, his specialist knowledge relates to capital market advisory and equity market analytics. Matthew has a diploma in Financial Advisory, Applied Finance and is ADA 1 & 2 accredited.