The Johannesburg Stock Exchange. File picture: Siphiwe Sibeko
JOHANNESBURG - JSE-listed Italtile has announced that it wanted to raise up to R1.59 billion through a partial underwritten renounceable rights offer. 

The tile and sanitary ware manufacturer said it would offer a total of 260 539 178 new ordinary shares of no par value at a subscription price of R11.57 each for every 100 Italtile shares held at the close of business on November 10. 

The company said the purpose of the rights offer was to fund working capital and expansions. 

In September the Competition Tribunal approved the acquisition of Ceramic Industries and Italtile confirmed that it would go ahead with the rights offer. 

Italtile informed its shareholders last year that it wanted to acquire the 74.5% stake in Ceramic Industries through its subsidiary Italtile Industries for R3.49bn.  

“In terms of the Ceramic acquisition the purchase consideration, which ultimately equated to R3.49bn, was to be settled 50 percent in cash and 50% by the issue of Italtile shares at an issue price of R11.57 per share,” the group said.

The group advised its shareholders it undertook the renounceable rights offer in order to ensure the equitable treatment and to afford minority shareholders the opportunity to avoid dilution of their stake as a result of the Ceramic acquisition.

Italtile chief financial officer Brandon Wood said as it was announced when the formal offer was made to Ceramic in 2016, the purpose of the rights offer was to allow minority shareholders to clawback their shareholding positions which would have been diluted as a result of the issue of Italtile shares to settle 50% of the purchase consideration for Ceramic.

“The rights offer proceeds were earmarked at that point to fund working capital and capital expansion. However 18 months have passed since the transaction was initially proposed, and in that time the group, given its cash generative nature, has continued to accumulate cash.  Given this strong cash flow position, the group is in a position to settle a large portion of the acquisition consideration earlier than planned,” Wood said.

Italtile said the remaining balance of the rights offer proceeds would be used to satisfy future working capital requirements and to fund further capital expenditure in terms of the group’s future strategy as initially planned.

The implementation of the rights offer is subject to approval being obtained from the JSE of the rights offer circular and for the listing of the letters of allocation and the rights offer shares.

-BUSINESS REPORT