F&P wins longer bank lifeline

Fisher & Paykel Appliances has bought itself more time to negotiate with its banks but analysts still believe the company will have to raise capital from shareholders.

The whiteware maker yesterday said it had reached an agreement with its banks to extend the repayment date for its interim $80 million loan facility until May 29.

It had been due to expire on April 30 although the company signalled last week it might be extended.

Fisher & Paykel is hoping to pay back the facility through refinancing its total bank debt as part of moves to counter a $570 million debt blowout.

Fisher & Paykel head of investor services Paul Brockett said the date had been extended because the company was still negotiating with its bank.

Asked how the negotiations were progressing, he said: "We are still talking to them so that is a good thing. This gives us another month to negotiate with them."

Brockett would not rule out another extension if all the parties agreed to it.

Forsyth Barr analyst Guy Hallwright said the extension was not surprising given the company had already signalled that there could be a delay.

"Obviously they have a number of short-term issues they are working through based on a buildup of working capital from setting up the new buildings before selling the old. It's not surprising the banks have given them longer to work through those sales."

The company is trying to sell its Brisbane plant after moving manufacturing to Thailand and its Auckland facilities are also for sale in a leaseback arrangement.

Hallwright said Fisher & Paykel was trying to move its financing to be secured over assets and that left the question of whether there was enough equity to do that.

The sale of the Brisbane and Auckland facilities would be critical to the decision.

"If both of those are approaching completion, then there is no reason the banks wouldn't be happy to continue the facility."

But Hallwright said it seemed likely Fisher & Paykel would still have to go back to shareholders for more money.

BT Funds Management chief investment officer Paul Richardson was also convinced a capital raising would go ahead, given the level of debt held by the company. "Everybody is expecting they will have to do a pretty substantial capital raising."

Richardson said one lesson which had been learned over the past few months was those who did not need money had raised it easily whereas those who did had been forced to resort to the begging bowl.

Brockett said the company was still looking at other ways to shore up the balance sheet, including the option of finding a cornerstone investor or capital raising. But he did not have a timeframe as to when they would be considered by the board.

F&P Appliances shares closed up 1c at 45c yesterday.