Fletcher Building has announced a $700 million capital raise to reduce its $1.7 billion debt and strengthen its financial position amid declining demand in housing and building materials.
The company will sell $282 million worth of new shares to investment funds and $418 million to current shareholders, with shares priced at $2.40, a 17% discount from Friday’s market close.
The firm has also halted trading on the stock exchange to facilitate the transaction. In addition to raising capital, Fletcher Building plans to cut $180 million in costs to navigate the ongoing market volatility.
Incoming CEO Andrew Reding said the capital raise would provide financial stability through the economic downturn, with market volume declines of 10-15% expected to persist throughout the year.
Despite these challenges, Reding highlighted the company’s strong underlying business and positive cash flow.
Fletcher is also addressing prior issues, such as a $A155 million settlement for leaky pipes in Australia, which played a role in the decision to raise capital. Reding, emphasizing a decentralized management approach, said the company remains focused on long-term resilience and investment opportunities.
