BL/Wesfarmers Plans to Sell A$2.5 Billion of New Shares (Update1)
By Robert Fenner
April 21 (Bloomberg) -- Wesfarmers Ltd., Australia's second- largest retailer, will sell A$2.5 billion ($2.3 billion) of new stock to refinance debt amid surging borrowing costs.
The stock sale will be done through a rights offer, allowing investors to buy one new share at A$29 for every eight shares they own, Perth-based Wesfarmers said in a statement today. The offer is at a 22 percent discount to the stock's last traded price of A$36.97.
Chief Executive Officer Richard Goyder had until October to refinance A$4 billion of debt he took on in last year's A$18.2 billion purchase of supermarket owner Coles Group Ltd. The company paid more than 11 percent interest on $650 million of bonds sold this month as investors, concerned about losses linked to the U.S. housing market collapse, demanded higher premiums.
``The Wesfarmers board believes that an equity issue is in the best interests of shareholders given a backdrop of ongoing volatility in global debt capital markets,'' Goyder said. ``The equity raising will strengthen the Wesfarmers balance sheet and provide us with financial flexibility going forward.''
The company said food and liquor sales rose 5.2 percent in the three months ended March, with revenue from stores open at least a year gaining 3.6 percent.
Wesfarmers shares haven't traded since April 16 as the company completed details of the share sale. The retailer has asked for the halt to continue until April 28 so it can sell the stock.
To contact the reporter on this story: Robert Fenner in Melbourne rfenner@bloomberg.net
Last Updated: April 20, 2008 19:43 EDT
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