Dec. 5 (BusinessDesk) - A2 Corp, which markets milk products with a protein variant claimed to have health benefits, plans to raise $20 million in a placement while its three major shareholders will sell down their stakes, boosting liquidity to allow a shift to the NZX main board.
The Sydney-based company has been listed on the NZAX market since 2004 and in that time has grown to $411 million – bigger than some existing companies on the NZX 50 Index. But more than half the shares are held by three investors, meaning the company’s ‘free float’ is smaller.
ASX-listed Freedom Foods Group owns about 26 percent, Mountain Road Investments, associated with chairman Cliff Cook has 22.7 percent and Equity Group Investments has 8.3 percent currently. Their holdings will reduce to 18 percent, 8.9 percent and 4.6 percent respectively after the selldown.
The placement to institutions and the selldown are both priced at 50 cents a share, a 26 percent discount to the price they last traded on the NZAX of 68 cents before being halted. They remain in trading halt pending the placement. Inclusions in the NZX 50 could happen as soon as February next year.
Managing director Geoffrey Babidge said the funds will be used to drive its global growth, specifically targeting the UK liquid milk market, the Chinese infant formula market, lifting awareness of the A2 brand in Australia and New Zealand, entering the Chinese liquid milk market with UHT milk and going after another key market such as the US, Canada or Germany.
Freedom Foods, Mountain Road and Equity Group have undertaken not to sell any more of their shares until at least 10 days after the release of A2’s results for the year ending June 30, 2013.
The shares have soared 179 percent this year as sales soared in Australia, it began selling infant formula into China and expanded in the UK. Profit in the year ended Jun 30 more than doubled as revenue jumped 44 percent. The bulk of sales were in Australia.
The plan to raise $20 million follows more modest capital raisings, adding up to $7.7 million last year. As at June 30 it had cash on hand of $6.6 million and little or no net debt.
Last month, in announcing the results of a strategic review, the company confirmed it would continue to be “capital light,” relying on partnerships to drive its growth into new dairy markets and categories.