A2 Corp to raise $20m of capital

Photo / Ross Setford

The three main shareholders in the alternative milk company, A2 Milk, will substantially sell down their holdings, says the firm.

At the same time, A2 Corp said it would raise $20 million in fresh capital. Together the transactions will be worth up to $90 million.

ASX-listed Freedom Foods Group owns about 25.9 per cent of A2 Corp, Mountain Road Investments, which is associated with chairman Cliff Cook, has 22.7 per cent and Equity Group Investments has 8.3 per cent.

After the transaction, their holdings will reduce to 18 per cent, 8.9 per cent and 4.6 per cent respectively.

At the same time, the company intends to raise $20 million through a share issue pitched at 50c a share.

The three major shareholders, who will sell down their holdings at 50c a share, have undertaken not to sell any more until at least 10 days after the release of A2 Corp's results for the June 2013 year. A2 Corp's shares last traded at 68c.

A2 Corp said the moves would increase liquidity in the stock and facilitate the company's move from the NZX's alternative board to the main board.

The transactions will be through brokers UBS.

The moves follow speculation in the market place last week of a capital raising and sell-down by A2 Corp's major shareholders.

Managing director Geoffrey Babidge said the success of A2 brand milk in the Australian market had resulted in wider investor interest.

The offer price of 50c per new share represented a 22.7 per cent discount to the volume weighted average price since October 31 - the last trading day before the outcome of the company's strategic review.

A2 Corp maintains that its "a2" milk - which comes from cows specially selected to produce a2 beta-casein protein rather than A1 - has health properties.

The company, which has a market capitalisation of $399 million, has trading activities in Australia and New Zealand.