Steel & Tube raises $42.3M in discounted retail rights offer with 71% uptake

Wednesday 5th September 2018

Steel & Tube Holdings says 71 percent of its deeply discounted 1-for-1.9 pro rata rights offer was taken up by shareholders and the stock has been halted for a shortfall bookbuild to raise another $17.8 million.

Shareholders bought about $42.3 million of new shares at $1.05 in the offer, a 28 percent discount to the $1.46 price they were trading at prior to the announcement. The shares closed at $1.23 yesterday having dropped 37 percent so far this year.

The uptake "represents approximately 70.7 percent of the new shares available to eligible shareholders under the rights offer. In addition, applications totalling approximately $5.6 million were received for additional new shares attributable to rights not taken up," Lower Hutt-based Steel & Tube said in a filing to the stock exchange.

The offer is part of an $80.9 million capital raise to shore up the steel products maker's balance sheet after a major restructure at the steel building products supplier. A $20.8 million placement was completed on Aug. 7, with strong support from existing and new institutional investors.

While Steel & Tube needed a waiver from its banks earlier this year after writedowns and impairments meant it breached at least one lending covenant, last month the company said improving sales continued into the current financial year and it expects to resume dividends as restructuring begins to pay off.

"The funds raised will strengthen our balance sheet and provide us with financial flexibility to implement our business transformation initiatives and achieve our longer-term strategic objectives," said chair Susan Paterson.

A shortfall bookbuild will be conducted by First NZ Capital Securities today.

According to Steel & Tube, shareholders who did not take up their full entitlements, and those ineligible to participate in the rights offer will receive a share of any premium achieved - the amount by which the shortfall bookbuild price exceeds the application price for new shares of $1.05 per new share - for the rights which they did not take up.

"There is no guarantee that the shortfall bookbuild will result in a premium," it said.

The new shares under the rights offer are expected to be allotted on Sept. 7.

(BusinessDesk)

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