September 13, 2013

Australian Agricultural Company to raise nearly US$300 million

Australian Agricultural Company(AACo) intends to make about AUD299 million (US$277 million) by issuing new shares and convertible notes.

The cattle breeder will sell more than 219 million extra shares for an offer price of AUD1 (US$0.92), compared to its last traded price of AUD1.17 (US$1.08).

The capital raised will be used to fund existing capital expenditure, reduce debt and free up the company's finances while some of the proceeds raised will also go towards the company's AUD91 million (US$84 million) Darwin abattoir, currently under construction.

Civil works were finished in May and by the second half of 2014 full construction should be done.

The Australian Agricultural Company is expected to be able to process around 200,000 cattle annually and provide a direct export route to key Asian markets. This is part of the company's wider plan to shift away from unreliable domestic markets in favour of more stable global demand.

The abattoir development has been welcomed in the Northern Territory, where it's hoped it will reinvigorate the state's cattle industry which was hit by a 2011 temporary ban on live exports to Indonesia.