A2 Milk plans to raise new capital to foster worldwide growth

A2 Milk is planning to raise NZ$40 million (AU$36.7 million) to fund a new equity. Its shares on the ASX and NZX halted on Wednesday at NZ$0.72 (AU$0.66) per share.

To achieve its goal, the company would carry out guaranteed placements to competent investors on Thursday. New Zealand’s Goldman Sachs has been given the responsibility of organising the recruitment process as an organiser, underwriter and bookrunner. In addition, a book has been hired at a floor price of NZ$0.67 (AU$0.62) for each new share to decide on the offer price.

The capital would initially be used for funding working assets facilitating the growth of the products in budding markets Australia, China and New Zealand. Through the raised equity, A2 Milk, which makes products to ease people from difficulties in digesting milk, will make sure its growth in Australia and New Zealand is seriously backed up. Also, the exposure of the products would be initiated to international markets of the UK, the U.S. and China.

As soon as the set of investors are hired, there is a plan to buy a share under Share Purchase Plan to give the shareholders in Australia and New Zealand a chance to gain NZ$15,000 (AU$13,783) per share and prompt rise in the fund to another NZ$3 million (AU$2.8 million), though it’s not yet underwritten. The price for shareholders under SPP rule will be the same as the cost offered to the investors participating in the placement.

The company said that it aims at enhancing growth opportunities by raising capitals. A2 Milk Managing Director and Chief Executive Geoffrey Babidge claimed that raising equity will help catalyse its productivity and also “raise raise the company's capital markets profile and enhance opportunities for investor participation whilst maintaining a conservative capital structure.”

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