Rhodes to use bookbuild cash to fund capex

Picture: Supplied

Picture: Supplied

Published Nov 24, 2016

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Johannesburg - Rhodes Food Group has raised R662.5 million as it seeks to reduce debt and grow its footprint.

The company says, in a statement issued on Thursday, that the cash was raised through the issue of 25 million shares in an accelerated bookbuild after market close on Wednesday.

Read also: Rhodes Food rallies on earnings expectations

The shares were placed with 26 local and offshore institutional investors at R26.50, representing a discount of 2.3 percent to the 30-day weighted average traded price in its shares.

CEO Bruce Henderson says the proceeds of the bookbuild will be used to fund planned capital expenditure and internal investment, create capacity for possible future acquisitions and to reduce debt levels.

“RFG’s growth strategy is to complement organic growth with strategic, value-accretive acquisitions of food producers operating in allied product categories. We have concluded six acquisitions since the listing on the JSE in October 2014 and these businesses are making a meaningful contribution to group revenue, with profitability improving as the businesses are integrated.”

Henderson says the acquisitions and capital investment have mainly been funded through operating cash flows and debt funding. “The equity capital raise will strengthen the group’s balance sheet and create capacity to pursue further attractive acquisitions.”

RFG recently announced its two largest acquisitions to date. Durban-based Pakco, which produces spices, condiments and instant meals, was acquired for R200 million and KwaZulu-Natal-based pie producer Ma Baker was bought for R212 million. Both acquisitions are subject to due diligence and competition approval.

Earlier this month, the company said it expected earnings for the year to September to rise by up to 72 percent. Earnings per share were forecast to be between 128.8c and 132.6c higher compared with 77.1c for the previous similar period.

Headline earnings per share would be between 129.3c and 133.1c, from 77.4c.

IOL

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