- New Zealand fuel company Z Energy (ZEL) has finished the first chunk of its $330 million capital raise today
- The company raised roughly $270 million through a $2.70 share placement, with existing shareholders given priority
- The remaining funds will be raised through an upcoming share purchase plan
- Yesterday, the company revealed an $83 million full-year loss over March 2019 to March 2020, largely attributed to COVID-19 related costs
- The funds from the capital raise will be used to pay down some debt and bolster Z Energy’s balance sheet
- Shares in Z Energy closed 0.34 per cent higher today, trading just shy of $3 each
New Zealand fuel distributor Z Energy (ZEL) has completed the first part of its NZ$350 million (A$330 million) capital raise today.
The company raised NZ$290 million of the total through a share placement under which it placed 100 million new shares at NZ$2.90 a pop.
The capital raise had some unusual conditions, however, with Z Energy receiving ASX approval to place up to 30 per cent of its existing share issue without seeking shareholder approval.
Ordinarily, companies can only place new shares up to 15 per cent of their existing ordinary shares, although this rule was temporarily amended to 25 per cent recently to help businesses raise cash in the face of COVID-19.
In order to secure the 30 per cent placement capacity, however, Z Energy had to give priority to existing shareholders. As such, the company said over 95 per cent of the new shares issued under the placement was given to existing shareholders, with new investors making up the minority.
Ironically, however, the placement was only taken up to 25 per cent of Z Energy’s existing share issue — meaning the ASX exception was not actually necessary.
Nevertheless, Z Energy CEO said the company is “delighted” with the placement uptake.
“We are delighted with the strong support for the placement from Z Energy’s existing shareholders and a small number of new shareholders in both local and offshore markets, attracting bids well in excess of the NZ$290 million total offer amount.”
The company said the new funds will be used to pay off existing debt facilities and bolster its balance sheet as COVID-19 keeps market conditions tough.
The remaining NZ$60 million will be raised through a share purchase plan under which shareholders can apply for up to NZ$50,000 worth of new shares at a 2.5 per cent discount to the five-day volume-weighted-average price of shares over the last five days of the offer period.
The capital raise was announced with the full-year results to March 31, 2020. Over the year, the company lost $88 million, largely due to COVID-19-related costs. Z Energy had to cancel its end-of-year dividend due to current market volatility and has no given shareholders an earnings guidance for the next financial year.
Shares in Z Energy outperformed the wider market today, closing 0.34 per cent higher at $2.98 per share.