Nuplex extends trading halt for larger capital raising

Wednesday 18th March 2009

Nuplex Industries extended a trading halt on its shares to amend plans to raise capital after investors indicated the specialty chemicals maker should raise more funds at a lower price.

The Auckland-based company, which this week gained approval from its banks to loosen the terms of its loan covenants, had its stock halted until the end of trading tomorrow. It had planned to raise $110 million selling shares to repay debt though some investors balked at the terms and said it needs more funds.

Investors say Nuplex had to drop the offer price as low as 50 cents, with a 10 cents-a-share discount for the rights component. That's less than half the $1.07 price the stock traded at before being halted on Monday. The shares have slumped 64% this year as the weakening New Zealand dollar drove up the value of foreign debt while asset values fell and demand waned.

The company may be contemplating an even deeper discount and lifting the amount to be raised to lure enough investors. Among concerns for shareholders are that Nuplex may have to tap the market for more funds down the track, given its debt levels.

Nuplex's banks this week agreed to revise the terms of its senior debt cover ratio, waiving the requirement that it be no more than 3 times in the period up to April 30 and allowing the ratio to reach 3.5 times between May 1 and June 29, easing back to 3.25 times from June 30 to Sept. 29 and back to 3 from Sept. 30, according to a company statement today.

The banks imposed conditions on the agreement, including capping dividend payments at 60% of net profit, applying any assets sales proceeds over $2 million to debt repayment and taking a general security over the company's Australian and New Zealand assets.

Nuplex bank debt facilities total A$350 million and following the capital raising the total amount drawn will be about $240 million, it said.

The placement and rights issue are being managed by First NZ Capital Securities, which will also underwrite the rights. The number of new shares allotted is likely to exceed 15% of existing shares on issue and the company will hold a special shareholder meeting on April 3 to gain approval for the plan.

By Jonathan Underhill

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