(Bloomberg) -- Fletcher Building Ltd., New Zealand’s largest supplier of construction materials, is raising more equity to reduce debt and avoid having to sell assets below value.
The Auckland-based company said Monday it will seek NZ$700 million ($437 million) via an institutional placement and a rights issue to existing holders at a one-for-4.49 ratio. The shares are offered at NZ$2.40 each, or a 17% discount to the closing price on Friday.
Fletcher last month reported a full-year loss and warned of a continuing slump in demand for building materials as New Zealand and Australia housing demand weakens. The company, which has sold its Tradelink plumbing business in Australia, said it was considering options for its Residential and Development unit.
The company on Monday said the equity raising will strengthen the balance sheet and improve financial stability and resilience. It plans to repay about NZ$678 million of debt.
An improved financial position “preserves optionality in relation to its portfolio and reduces short-term pressure to realize assets at below intrinsic value.” it said.
Former executive Andrew Reding has been appointed as chief executive officer effective Sept. 30, a permanent replacement for Ross Taylor who quit in March. The company’s chief financial officer, chair and some other directors have also left during a year of turmoil in 2024.
“We believe the equity raising bolsters our financial position, assisting us to better endure near-term market headwinds,” Reding said in a statement. “With a strengthened balance sheet, the company can focus on executing key operational initiatives in preparation for a market recovery.”
Reding announced further cost reduction, targeting a NZ$180 million gross overhead savings in the year through June 2025.
The company hasn’t provided full-year earnings guidance but reiterated it expects key market volumes to be 10-15% weaker than a year earlier.
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