AWB to raise US$402 million, refinance corporate debt

 

 

Australian agribusiness AWB Ltd. on Wednesday unveiled plans to raise A$459 million (US$402 million) through the issue of new shares at A$1.00  each, refinance A$575 million in domestic corporate debt facilities and issued guidance for a swing to a massive loss in this fiscal year ending September 30.

 

Managing Director Gordon Davis said the capital raising is being undertaken to strengthen AWB's balance sheet and to provide flexibility through the subsequent reduction in net debt.

 

"AWB has a number of exciting opportunities in front of it," he said in a statement.

 

"The announcement will fundamentally reposition the company's balance sheet for this journey, including positioning it to participate in industry consolidation in Australia and enhance strategic options,'' he said.

 

AWB is in talks with a global commodity company, which it didn't name, about a proposal to sell AWB Geneva and to partner in its Australian commodities unit, it said.

 

Company guidance is for a net loss this fiscal year in a range A$228 million to A$259 million, swinging from a profit last fiscal year of A$64.3 million, it said in a statement.

 

Reasons cited for the expected loss this fiscal year include a A$120 million impairment charge against AWB's Landmark Financial Services unit, losses on significant or one-time items in a range A$34 million-A$36 million and a loss in a range of A$149 million-A$171 million on discontinued operations.

 

This includes a loss of A$18 million-A$20 million on the Hi-Fert fertiliser business, a loss in a range of A$57 million-A$67 million on the Brazilian business and wind down provisions in a range A$74 million-A$84 million.

 

But the company also said it expects to post a profit in a range A$160 million-A$175 million on its continuing businesses, on an EBITDA measure, or earnings before interest tax, depreciation and amortization, down from a profit on this measure last fiscal year of A$228.5 million.

 

The company won't pay a dividend for fiscal 2008-09.

 

As for next fiscal year, AWB expects its continuing businesses to post a profit before tax and one-time items in a range A$95 million-A$115 million, prior to the benefits of the equity raising, likely in a range A$20 million-A$25 million. Profit on this measure in fiscal 2008-09 is expected in a range A$85 million-A$95 million.

 

Next fiscal year's result will, in part, be driven by a wheat harvest this crop year ending March 31, 2010, of 22.7 million tonnes, up from an actual 21.4 million tonnes last crop year. The company expects to operate a collective sales pool for wheat of 3.0 million tonnes from the new crop, compared with an actual 2.6 million tonnes from the 2008-09 crop.

 

Following the capital raising, net debt is estimated to fall to A$490 million at the end of this fiscal year on September 30, down A$646 million on year, he said.

 

US$1 = A$1.14269 (Sep 23)