Fertiliser maker Incitec Pivot has unveiled a $1.17 billion capital raising to refinance its debt facilities after delivering a rise in profit for the year.
The fertiliser group said it would raise the capital through an accelerated non-renounceable entitlement offer, with shares priced at $2.50 each, a 39.6% discount to the company's closing price yesterday of $4.14. The shares are now in a trading halt.
A number of other companies, including National Australia Bank and wealth manager AMP, have recently raised capital by selling shares at a discount.
Austock Securities senior client advisor Michael Heffernan said companies needed to offer an attractive option to entice people back into a difficult market.
"This is a very tight market now, it is particularly hard for anyone raising funds,'' Mr Heffernan said.
Incitec chief executive Julian Segal said the raising is expected to provide the company with sufficient funding to repay the balance of the $2.4 billion bridging loan used to acquire Dyno Nobel.
"This continues our strategy of prudent economic management which has delivered strong financial results like those announced today,'' Mr Segal said in a statement.
He said the company was not raising capital to finance a potential acquisition.
The company delivered a 200% increase in profit to $614.3 million including individually material items during the 12 months to September 30, underpinned by higher fertiliser prices.
Underlying profit, excluding individual material items, climbed by 225% on the previous corresponding year to $657.2 million.
Sales revenue was 113% higher at $2.92 billion.
Incitec said the near-term outlook for fertilisers was uncertain but strong long-term industry fundamentals remain despite the global credit crisis.
"We remain confident about the future notwithstanding the uncertainty in the global financial environment,'' Me Segal said.
"We expect the strong long-term industry fundamentals to continue and we will enjoy the benefit of a full year of earnings from our explosives business.''
Incitec expects strong long-term mining and agriculture to continue, with low world food stocks to underpin future fertiliser demand.
The company declared a final dividend of 19.5 cents, bringing total dividends for the year to 29.7 cents.
Incitec acquired Dyno Nobel, the world's second largest explosives supplier, in June for $2.7 billion.
AAP
