Comvita dusts off capital raising plans, sets sights on $50m

Comvita has gone into a trading halt while it raises fresh capital. Photo / Hawke's Bay Today

Manuka honey exporter Comvita has resusitated its earlier plans to raise capital with a fully underwritten $50m placement and rights issue.

Comvita said it planned to raise about $50 million via a $20 million placement to institutional investors, together with a one of 4.15 pro-rata accelerated non-renounceable entitlement offer.

The company in April said strong trading conditions had enabled the company to continue paying down debt supporting, which supported its decision to postpone its planned capital raising.

The offer is fully underwritten by Craigs Investment Partners Limited and Forsyth Barr.

The new shares are being offered at $2.50, a 65 percent discount from $3.81 at market close yesterday.

In its latest result for the six months to December 31, Comvita reported a loss of $12.97m, up from the previous year's loss of $2.68m.

Board chair Brett Hewlett said the money would strengthen the balance sheet and help the business return to growing profits following a tumultuous period.

"Now the market conditions have stabilised, it is prudent to undertake the equity raising as foreshadowed earlier in the year," he said.

The company is taking advantage of a surprise tail wind after a difficult run in recent years, he said.

Comvita's share price has fallen from north of $12 in 2016 to just over $3 at the start of this year.

In 2018, the company was removed from the NZX50 Index.

In an effort to reverse its downward slide, the company has embarked on a transformation project to slim down the business by cutting staff and focusing solely on core products.

As the pandemic led to a stock market crash, Comvita plunged as low as $1.60 before making a dramatic recovery.

The share price more than doubled as demand for health and immunity products skyrocketed - it is now up almost 18 percent year-to-date.

Comvita said most of its markets have seen sales increase 7 percent compared to this time last year as consumers gravitate towards natural products, such as manuka honey and propolis, to strengthen immunity.

Staff reporter, BusinessDesk