Rush on rights boosts Nuplex

Nuplex shares have received a boost from a last-minute rush on its rights issue - but investors won't know until next week if an additional $22.8 million top-up placement will go ahead.

Shares in the resins and plastics maker closed up 4c to 35c yesterday as 11.6 million rights changed hands in the last day of a two-week trading period.

That pushed the value of the rights up to a 10.5c high - more than triple the 2.7c low they hit early on in the trading period.

In total just under 72 million of the possible 577 million rights were traded in the issue which is part of a possible $155.6 million capital raising.

ASB Securities private client adviser Stephen Wright said the level of trading had been surprising given the slow start but it had picked up in the last few days.

Wright believed it was momentum which had pushed up the trading and the price of both the rights and the ordinary shares.

"A lot of people thought it was going to be lower."

Wright said early trading had put the rights price as low as 2.9c and many had thought it was going to stay low.

He said the pick-up showed the issue was well-received and that there were enough new investors to buy in.

But overall Wright said the trading had not amounted to a lot of rights being sold given there were 577 million on issue.

Nuplex had advised shareholders to take up their rights or face up to 85 per cent dilution of their shareholding.

But to do so they had to put in $1.61 for every share owned in the seven for one rights issue at 23c per right.

Selling the rights was one way to recoup some of the money.

Martin Stearne, director of equity capital markets for First NZ Capital, which is fully underwriting the capital raising, described the level of trading as encouraging.

He said it showed some shareholders had decided to sell their rights but the majority had decided to take them up.

But it is unknown yet whether the 12.5 per cent of rights traded will be enough to satisfy institutional underwriters who have the chance to buy up more shares if First NZ takes up an option to top up the $132.8 million shareholder raising with a further $22.8 million.

The top-up has been viewed as controversial by some in the market for giving institutions a better deal over retail shareholders.

Stearne said no decision would be made on whether the top-up would go ahead until April 23 when the allotment of shares was completed.

First NZ have four business days after then to make the decision.

But Wright said he expected the top-up placement to go ahead given the shares were trading at 35c, meaning the 23c buy-in rate would be seen as a good deal.

Nuplex has been forced to raise capital to keep its bankers happy after the company breached a senior debt cover ratio as a result of falling sales and a drop in the kiwi dollar.