Csr Taps Market For Cash Injection
The Age
Tuesday November 18, 2008
CSR will attempt to raise $482 million from shareholders to reduce its debt to more manageable levels as it faces a downturn in the national economy and the housing sector.
The conglomerate, which has a building materials business, an aluminium smelter and a sugar milling division, will offer new equity to investors at $1.40 a share - a 22% discount to the closing price last week. The capital raising comprises a $125million institutional placement and a non-renounceable 1-for-4 pro rata entitlement offer to share-holders of up to $357million. About $304million will be underwritten.Companies buckling under debt and refinancing are tapping the market for capital. NAB and Incitec Pivot have raised billions and the dash for cash is expected to speed up as the year ends.Although analysts welcomed CSR's decision to reduce some of its $1.34billion debt, some were dismayed that it made no mention of it at its half-year presentation a fortnight ago. Brokers handling the raising last night reported good support for the offer."We strongly believe in the market positions of our divisions and today's initiatives represent a prudent, proactive step to strengthen CSR's overall position during this period of uncertainty," said CSR managing director Jerry Maycock.He said the rights issue and placement meant CSR was offering scrip to existing investors and inviting new major shareholders onto the register of the 150-year-old group.Depending on the response, CSR's gearing will slip from 44.5% to between 28.8% and 34.8%. Defending the timing of the announcement, Mr Maycock said he was considering examining capital management alternatives "very closely".The record date for the entitlement offer is 7pm tomorrow. New shares issued will not qualify for the interim dividend of 6 a share for the period to September 30, 2008.CSR shares are in a trading halt. They last closed at $1.80.
© 2008 The Age
