Nuplex to raise $110m after reaching deal with banks

Nuplex Industries says it is planning to raise $110 million of new capital to reduce debt under a deal reached with its bankers.

The resins and chemical company has been talking with its banks as it tries to have the terms of its senior debt facilities changed.

Previously it said it had breached a covenant requiring debt of no more than three times ebitda (earnings before interest, tax, depreciated and amortisation) as at December 31.

The company today said talks with the banks had been successfully concluded, and various changes to its senior debt facilities with the banks agreed.

As part of the agreement, the banks had required that net proceeds from the planned capital raising would be applied to reducing amounts outstanding under the senior debt facilities.

Nuplex said it had in place bank debt facilities totalling A$350 million ($444.3 million). After the planned capital raising, those would be drawn to about A$240m.

The capital raising is likely to involve a placement of new ordinary shares to institutional and habitual investors, and a pro-rata renounceable rights issue of new ordinary shares to existing Nuplex shareholders.

A book-build process was starting today. Trading in the company's shares would be halted until the earlier of the close of trading tomorrow, or when Nuplex notified the sharemarket of the outcome of the bookbuild and placement.

As the number of new shares to be allotted under the placement was likely to exceed 15 per cent of the number of Nuplex's existing shares on issue, the placement was expected to be subject to shareholder approval, Nuplex said.

A special shareholder meeting was planned for April 3 to seek such approval, if needed.

The new capital to be raised from the placement and the rights issue would in the opinion of the directors be sufficient to meet Nuplex's short- and medium -term capital needs in the current economic and trading environment, the company said.

If the planned capital raising was not completed, Nuplex would be subject to a further review by the banks of their banking covenants.

Along with the capital-raising condition, the banks had required other conditions to the amendment of Nuplex's senior debt cover ratio (SDCR) covenant.

They included a condition that net asset sale proceeds, other than inventory, above $2m be applied to reducing senior debt facilities.

Any dividends for the financial year ending June 2009 should not exceed 60 per cent of net profit without agreement of the banks, and general security would be taken by the banks over all of Nuplex's New Zealand and Australian assets by the allotment date for the capital raising.

The placement and rights issue will be managed by First NZ Capital Securities, and will be fully underwritten by First NZ Capital Securities.

Nuplex shares closed at $1.07 on Friday, having been as low as 95c this month, after reaching a year-high of $6.47 last September.

- NZPA