Nuplex issues 578m new shares from rights issue

Nuplex has today issued the 577.6 million shares provided through a renounceable rights issue to existing shareholders.

Shareholders were offered seven new shares for every one existing share, at an issue price of 23c a share.

Within the first hour of trading today the price of shares in the resins manufacturer and distributor dropped 4c to 32c, having fallen from $2.42 last September.

Nuplex managing director John Hirst said the rights issue had provided the funds the company needed in the medium term as it built its international operations and took advantage of market opportunities.

"Nuplex is a profitable company with strong cash flow. We have strong market positions in global businesses that are expected to provide superior profits when demand returns to more normal levels."

The $132.8m rights issue was undersubscribed by 4.09 per cent, or $5.4 million, which was taken up by underwriters First NZ Capital and sub-underwriters.

First NZ Capital has four business days from today to exercise an option requiring Nuplex to allocate up to 99 million new shares to sub-underwriters, a broad range of institutional and habitual investors.

The underwriter's call option attracted some criticism, but Nuplex said previously that First NZ Capital did not earn an underwriter's fee on shares placed under the call option agreement and would not benefit.

The option ensured that institutions had some certainty over the shares available to them, as under the rights issue it depended on the level of rights taken up by shareholders.

Proceeds from the issue would reduce Nuplex's bank debt to about $280m, and lower the company's gearing ratio and interest costs.

Nuplex was stung by depreciation in the New Zealand dollar, which saw its foreign currency bank debt increase to $371m at the end of 2008. At the end of February this year, it increased to $400m.

- NZPA