IGA supplier Metcash is seeking to raise $330 million to strengthen its balance sheet as it weathers the COVID-19 restrictions.
The equity raising consists of a $300 fully underwritten placement to institutional investors at $2.80 a share, a 7.9 per cent discount to Friday’s ASX closing price, and a share purchase plan to retail shareholders that will be offered in May at a 2.5 per cent discount.
Metcash, which is in a trading halt, has also expanded its debt facilities by $180 million from existing lenders.
“The COVID-19 pandemic has presented a unique set of challenges for Australian businesses including an unprecedented level of uncertainty,” Metcash Group chief executive Jeff Adams said.
“The equity raising together with the new debt facilities should provide us with flexibility in this uncertain environment.”
Metcash said its food sales for the last five months ending in March were up 4.3 per cent compared with the same time a year ago, although higher costs to manage health and safety risks had partially offset these additional earnings.
Australians and Kiwis have been eating far more meals at home while restaurants remain closed as part of coronavirus restrictions.
“It is unknown to what extent the elevated sales will continue, including once restrictions are relaxed or lifted,” Metcash said.
Its liquor sales were up 3.2 per cent but they had not offset the adverse impact of the closure of its New Zealand operations and on-premise businesses in Australia, Metcash said.
It said its hardware sales have declined 1.3 per cent but that was an improvement of the first-half decline of 4.2 per cent.
Metcash supplies a range of independent brands including IGA, Mitre 10, Thrifty-Link Hardware, Porters Liquor, Cellarbrations, the Bottle-O, Foodland and Campbells.
Metcash said the funds would also be used to complete three bolt-on acquisitions expected to close in the first half of FY21 but gave no details other than they represented about a $45 million investment.