By Jenny Ruth
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Tuesday 12th May 2009 |
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Raising equity at the current depressed share price will probably be a last resort for Fisher & Paykel Appliances Holdings, says Morningstar Research.
Raising equity under such conditions "makes little sense and would be highly dilutive to existing shareholders," Morningstar says. The company will only do it if the banking syndicate loses confidence in it and/or Fisher & Paykel finds it difficult to generate the desired level of cash, it says.
Fisher & Paykel expects to raise between $215 million and $230 million by December through various operational initiatives including selling land and mothballing its Dunedin DishDrawer plant instead of relocating it to Thailand and ramping up its Mexican DishDrawer plant instead.
Relocating other factories to Thailand, Mexico and Italy will result in savings of about $71 million a year despite currency movements, Morningstar says.
The fact the company received an extension on its $80 million interim bank loan until May 29 "is encouraging and reflects the admirable support FPA is getting from its banking syndicate to tide over its current financial woes," it says.
FPA expects to refinance its total debt by May 29 "and is working closely with its banking syndicate to achieve this goal."
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