Fletcher renegotiates with US lenders; working on capital-raising

Peter McIntyre.
Peter McIntyre.
Fletcher Building has successfully renegotiated borrowing terms with its US Private Placement (USPP) lenders and is closing in on completing its $750 million capital-raising.

Fletcher recently completed the retail component of its one-for-4.46 entitlement offer, raising $132.3 million, which left a shortfall of $97 million to be made up from the retail shortfall book-build.

Fletcher said a total of $750 million would be raised under the offer, including more than $515 million from institutional investors, most of which would be used to repay senior debt, which would leave Fletcher with gross borrowings of $1.78 billion and available debt facilities of $2.71 billion.

The capital-raising was prompted by Fletcher having revealed there was $952 million in accumulated and expected losses due from its Building + Interiors division, which had negotiated fixed price contracts but subsequently faced massive cost overruns.

Those included the international convention centre and hotel in Auckland and Christchurch's justice precinct.

Fletcher had also arranged a $500 million standby loan facility, if it was required to repay the USPP $1.1 billion loan, but that was not now required and would be cancelled from tomorrow.

Fletcher had also reined in its syndicated loan facility, back from $1.27 billion to $925 million.

Craigs Investment Partners broker Peter McIntyre said Fletcher had ''ticked all the boxes'', in its efforts to renegotiate its loans and deal with debt, from the Building + Interiors issue.

Its retail book-build seeking $750 million had been successful, as were negotiations with its bank syndicate and USPP lenders, its loan facility was reduced and the $500 million standby facility was not required.

''Importantly, Fletcher remained in the MSCI index. From here the market will be looking at its control of margins, and hopefully no further write-downs,'' Mr McIntyre said.

Fletcher said it had agreed revised terms with holders of its notes in the USPP market, having been forced to seek a waiver when it breached the terms of the debt.

There would be no change to the maturities or the underlying margin payable on the notes ''other than the 1.25% additional margin outlined above which will cease to be payable no later than 30 June 2019,'' Fletcher said.

The same margin applies to its bank facility.

- Additional reporting by BusinessDesk

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