Affco set to move on rights issue

By PHILIPPA STEVENSON

Affco is going ahead with its rights issue next month.

The struggling North Island meat company said the fully renounceable one for one issue of about 270 million new ordinary shares would be priced at 10c a share.

Renounceable rights allow shareholders to sell the rights on the market.

Affco executive chairman Sam Lewis said the $27 million raised would go to reduce long-term debt, improve its financial structure and flexibility, and modernise its plants.

He said the company's two major shareholders, Talleys Fisheries and Toocooya Nominees, would fully subscribe for their entitlements of about 54 million shares and 50.5 million shares, respectively.

Talleys' present shareholding is 19.9 per cent and Toocooya's is 18.7 per cent. They would also underwrite the issue subject to an exemption from the Takeovers Panel and gaining shareholder approval.

Affco's third largest shareholder, Hugh Green Investments, which holds a 10 per cent stake, had also indicated support for the issue, Lewis said.

Directors had commissioned an independent report on the merits and implications of the proposed underwriting arrangements which would be made available to shareholders before the special meeting.

In May Affco reported a $14.7 million loss for the six months to March.

Affco shares closed down 4c at 17c on Friday.