Nuplex managing director John Hirst says he is confident the company will reach a deal with institutional investors over its share placement offer after spending another day in negotiations.
The plastics and resins maker had expected to notify the market of the share price reached through its book-building process yesterday
in the first step towards a $110 million capital raising.
But instead it asked for a continued trading halt until the end of today to allow talks with major shareholders and institutions to continue.
The deal had appeared to be on shaky ground after potential investors first rejected an initial two-tiered plan where institutions were asked to invest $60 million at 55c to 60c a share with the rights issue to existing investors offered at a 10 per cent discount for the remaining $50 million.
A second proposal to put both the placement share price and rights issue on level pegging with a 50/50 split of the $110 million raising at 50c a share was also not enough to satisfy investors.
The Business Herald understands that the company has now come back with a third proposal where existing shareholders will receive a more favourable deal and the level of the capital raised is likely to be higher.
Hirst would not be drawn on the details of the new proposal but said he was feeling a lot more confident after a hard night of talks on Tuesday.
"All I can tell you is things are looking pretty positive from where I can see." Hirst put the delay in the book build down to requests for more information but said the company and its adviser First NZ Capital had made some good progress yesterday.
Asked whether the raising would now be higher than the $110 million proposed on Monday, Hirst was coy.
"We have always said $110 million is a minimum number and if we now raised higher than that it wouldn't be an issue."
A source who did not wish to be named said the deal had been extended to a level higher than the $110 million to allay concerns that the company would be forced to come back to the market again in a short time if it did not raise more. He would not name the figure but said he was confident of the deal now going ahead.
A Macquarie Equities report by analyst Lyall Taylor on Tuesday raised the issue of whether the $110 million would be enough to continue meeting the group's banking covenants.
In his report, Taylor said he believed there was a 30 per cent chance the $110 million would not be enough and if it was not the company would need to come back to the market within six to 12 months to raise a further $50 million to $75 million.
That would put further dilutionary pressure on Nuplex's share price.
Market commentator Arthur Lim said he was confident the deal would get away but the key to its success would be the right structure.
"I am sure they will raise the money, the issue now is the structure - what kind of price will it be and how dilutionary."
The share price last traded at $1.07, giving a market value of $88 million.
Nuplex managing director John Hirst was coy on whether the raising would now be higher than $110 million. Photo / Richard Robinson
Nuplex managing director John Hirst says he is confident the company will reach a deal with institutional investors over its share placement offer after spending another day in negotiations.
The plastics and resins maker had expected to notify the market of the share price reached through its book-building process yesterday
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