Pro-Pac Packaging (PPG) is aiming to raise $30.2m from its shareholders in a renounceable rights issue, offering shares at 30c, a 52.8 per cent discount on the last trading price.
The funds will be used by Pro-Pac to pay down its $21m debt to its bankers, with the remaining cash to be applied to provide additional financial flexibility, and support the working capital requirements of the business. The raising will also see the release of the delayed 2021-22 full year accounts. Share trading will remain closed until the offer ends on 7 October.
The cash will be forthcoming, as the offer is underwritten by broker MA Moelis, while Pro-Pac’s current largest shareholder, Raphael Geminder’s Kin Group, will sub-write the entire issue.
The offer is split between institutional and retail buyers. Approximately 101 million new shares, representing approximately 124 per cent of PPG’s issued capital will be issued under the offer.
Kin Group will get an automatic director on the Pro-Pac board if it gets between 20 and 50 per cent of the shares, any more than 50 per cent and it would have two directors.
It has been a tough year for Pro-Pac, which it itself signalled would be the case at the start of the year, citing tightening shipping, increased labour shortages, and higher resin costs, along with Covid-19, as challenges for the company.
It sold its Rigids business to raise cash in April, with managing director Tim Welsh departing three months later.
