Metcash completes $300m equity raising

22 April, 2020 by Andy Young

Metcash has completed a $300m equity raising through approximately 107.1 million new fully paid ordinary shares to institutional investors at $2.80 per new share.

The company was seeking to strengthen its balance sheet and enhance liquidity through the raising, which is said reflects the current heightened level of uncertainty related to the COVID-19 pandemic. The raising also positions Metcash to be able to take on any acquisitions opportunities that may arose.

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Metcash Group CEO Jeff Adams said: “We are delighted with the strong level of support from both existing and new shareholders. These proceeds ensure we have financial flexibility to continue to support our independent retailers through this challenging period and progress our MFuture growth program.

“We will also be able to consider potential new growth opportunities should they arise and align with our strategic direction.”

Metcash is also looking to raise a further $30m through a share purchase plan, with eligible shareholder able to apply for $30,000 of new shares free of any brokerage or other transaction costs.

As part of its equity raising presentation Metcash gave a trading update, which stated that liquor sales growth pre COVID-19 continued in the second half of the 2020 financial year. Liquor sales increased 3.2 per cent for the five months ended March 2020.

The company added: “Sales have been negatively impacted by the COVID-19 related closure of our New Zealand operations and the closure of on-premise businesses in Australia. These closures took effect in the last week of March and sales to these customers account for approximately 20 per cent of total liquor sales.

“The business experience elevated sales in the Australian retail network in March/early April, which helped partially offset the decline from on-premise businesses and the New Zealand operations.

“It is unclear as to the timing of any lifting or relaxing of the COVID-19 restrictions. The business is focused on adapting to the changed external environment including accelerating the growth of its digital capability.”