Livestock trader Allied Farming is looking to raise up to $1.8 million in a mix of private placements and a shareholder purchase plan, to pay some debt and boost its working capital.
Allied chairman Garry Bluett yesterday announced an offer for ordinary shares by private placement, expected to raise between $200,000 and $300,000, and an offer of ordinary shares under a purchase plan to shareholders, to raise up to a maximum $1 million.
He had signalled in the half-year to December result that Allied had some obligations to further repay secured debt, and was focusing on its options.
Depending on the success of the share purchase plan, Mr Bluett yesterday said there could be an offer of ordinary shares, in a private placement up to a maximum of $500,000.
All shares would be issued at 5c. Allied's shares were trading slightly down after the announcement, at 5.5c yesterday.
''Allied Farmers will deploy this new capital to partially retire secured debt and to assist with working capital requirements,'' Mr Bluett said in a statement.
The share purchase plan is partly underwritten by Fraters Group Ltd.
Craigs Investment Partners broker Peter McIntyre said while the amount sought was not large, it was ''significant'' for Allied Farmers; representing about 30% of its market capitalisation.
Mr McIntyre said ''the hard question'' now was whether the 0.5c discount per share was enough to entice shareholders to take up the offer.
Allied nearly foundered over debt four years ago, when for its year to June 2010, it reported a $77.6 million loss, more than doubling the previous year's loss of $34.2 million.
Much of it was attributable to goodwill write-off and impairments against the former finance company assets.
Allied Farmers shares have lost more than 99% of their value in the past five years, BusinessDesk reported yesterday.
The company had a difficult life since taking over the loan books of failed finance companies Hanover and United, avoiding liquidation in 2013 by selling bonds, and selling down its stake in NZ Farmers Livestock to about 57% last year.
That helped repay $2 million owed to Crown Asset Management, which was set up in 2012 to acquire the assets of five failed finance companies repaid by the Government under its retail deposit guarantee scheme, including Allied Nationwide Finance.
For its half-year to December 2014, Allied reported its revenues rose from $9.06 million the previous year to $10.08 million, and turned around its previous after-tax loss of $468,000 to a profit of $907,000.
At the time, Mr Bluett said overall livestock sales were 14% up on the previous year, noting historically its Livestock Division made most of its earnings during second-half trading; with the division's second-half profits expected to exceed the first-half's before-tax $750,000 profit.
While there was ''uncertainty'' caused by the reduced dairy payout and forward herd sales were lower than a year ago, Mr Bluett said in December he expected herd sale activity to increase during the following months.
