Rubicon shares jump on fully subscribed rights issue

BUSINESSDESK: Forestry science and wood products investor Rubicon has completed its $21 million one-for-three rights issue, fully subscribed, with all shares taken up by existing shareholders at a slight premium to the issue price.

The Rubicon share price jumped 8.3% on the news this morning, to 26 cents, two cents above the 24 cents a share achieved for the unsubscribed entitlement portion of the issue, itself a 9% premium to the 22 cents per share application price.

"Under the terms of the offer, this premium will be paid pro-rata to those shareholders who either were unable to, or elected not to, take up their full entitlements," the company said in a statement to the NZX.

As previously announced, the company's three largest shareholders – Knott Partners & Associates, Third Avenue Management and Perry Capital – took their full entitlements, along with directors and company officers.

The rights issue was announced early last month, when the shares were trading at 39 cents apiece, and was a response to the company's failed attempt last year to float the unprofitable genetically enhanced timber developer, ArborGen, in which Rubicon has a 33% stake.

Rubicon also owns 59% of wood products manufacturer Tenon, which has struggled in the face of the downturn in the US housing market.

Some six million unsubscribed shares were offered in a bookbuild exercise as part of the rights issue, with all shares going to existing retail and institutional shareholders.

Chairman Steve Kasnet described the outcome as "very pleasing".

"The fact that not even one share of the offer needed to be allocated to outside investors is an indication of the extremely strong support the offer has received from the company’s existing shareholder base," he said.

"With this capital raise completed, we can now focus on rewarding our shareholders by addressing the considerable value that we all see in our ArborGen and Tenon investments, according to the existing plans which we have previously outlined."

The new shares are expected to be allotted July 6, four days ahead of the previously announced schedule.