Goodman Fielder, which posted a full-year loss after taking a charge against its baking division, plans to raise A$259 million ($327 million) to strengthen its balance sheet.

The Sydney-based food manufacturer yesterday announced a five-for-12 pro rata renounceable entitlement offer at A45c apiece. The offer is fully underwritten. The shares were last at A59c before being halted for the capital raising.

In August, Goodman reported an annual loss of A$166.7 million, including a A$300 million charge against its baking assets. The company has struggled to maintain profitability in the face of rising ingredient costs, while at the same time dealing with a competitive retail environment that forced significant discounting.

The company has a strategic review under way which is targeting annual cost savings of A$15 million.

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Eligible shareholders can purchase five new shares for every 12 held. The institutional component opened yesterday while the retail offer opens on October 4.

Shares of Goodman Fielder have declined 55 per cent on the ASX in the past 12 months.