Gunns Ltd is to raise A$430m in capital in order to repay debts and recapitalise its balance sheet “to support future growth”.
The Australian forest products company has said it will look to raise A$300 through institutional investors and a further A$130m from retail investors.
The cash raised through the institutional offer will be used to repay a A$225m working capital facility used in the purchase of rival timber company Auspine Ltd, with further funds used to repay existing company debts.
Money from the retail offer will also be used to repay existing company debts.
“The capital raising of up to approximately A$430m announced today will be used to recapitalise the company’s balance sheet providing Gunns with a robust balance sheet to support future growth,” said executive chairman John Gay.
Gunns also reported its results for the financial year to June 30, with profit after tax down by 15.6%.
The A$64.5m recorded was generated from revenue of A$861.9m, which was up 26.3% year-on-year.
Revenue from forest products was up 47% to A$634.1m, with ongoing global competition for wood supplies and the improving Asian wood fibre market playing an important role.
However, it said performance in the softwood arena was impacted in the period April to June by the slowing domestic construction market and stronger competition from imports.
