Mercer Group is proceeding with a $9 million capital raising, fully underwritten by Murray Capital's Rakaia Fund and by Christchurch financier Humphry Rolleston's Asset Management Ltd, to reduce debt and provide working capital.The stainless steel manufac
Mercer Group is proceeding with a $9 million capital raising, fully underwritten by Murray Capital's Rakaia Fund and by Christchurch financier Humphry Rolleston's Asset Management Ltd, to reduce debt and provide working capital.
The stainless steel manufacturer said in July that a $1.04m debt it owed to South Canterbury Finance had been taken over by a finance company owned by Asset Management, Gresham Finance Ltd.
Mercer will undertake a renounceable 4.6-for-1 rights issue, with an issue price for the rights of 5c per new ordinary share.
Mercer will issue warrants to Rakaia Fund to buy more new ordinary shares in the company at 5c per share for a stake of up to $5m, exercisable over the next three years.
The underwriting arrangements required shareholder approval because Mr Rolleston is a director and shareholder of Mercer Group, and chairman of Murray Capital.
Directors would recommend shareholders approve the arrangement, and have commissioned an independent report, Mercer chief executive Howard Milliner said.
Mercer, which had forecast a return to profit in the current financial year, has revised its outlook to a pre-tax loss of about $400,000 and earnings before interest, tax, depreciation and amortisation of about $1.6m. The forecast depended on an improvement in Mercer's Australian business.
The company's annual meeting is expected to be held in Auckland on December 17.
Mercer began operating in Christchurch in the 1880s and employs about 190 people in New Zealand and Australia in the design and manufacture of stainless steel products.
Mercer said in May that it had breached its bank interest cover covenant, and drew down $1.5m from Gresham Finance to reduce bank debt.
