Fletcher Building, a prominent player in the construction sector, has announced its strategic decision to secure $700 million to reduce debts and prevent the need to conduct what would essentially be a fire sale of assets.
As the company shared the news, it also put a hold on trading of its shares. Fletcher Building said the capital raising is “being undertaken as a prudent measure to strengthen the company’s balance sheet and improve financial stability and resilience in the current challenging environment.”
The company also stated that the capital raising would help uphold its commitment to preserving an investment-grade credit rating and ensuring sufficient covenant headroom within its debt facilities.
“With a strengthened balance sheet, the company can focus on executing key operational initiatives in preparation for a market recovery. In addition to the equity raising, Fletcher Building remains committed to ongoing cost reduction initiatives to manage profitability in the current operating environment, and we have targeted approximately NZ$180 million of gross overhead cost savings to be delivered in FY25,” Fletcher Building’s incoming managing director and CEO Andrew Reding said.
Fletcher has also begun divesting its assets, and during the announcement of its full-year results, it briefly mentioned the possibility of selling a portion of its residential division. At that time, the company indicated that it was an opportune moment to “explore capital partnership options for residential and development, to invest in and drive the next phase of the business’s success.”
“Consequently, we have engaged Jarden (investment and advisory firm) to explore partnership options with both local and international investors,” the company added.
In August, the company reported a net loss of $277 million after tax and announced that both its chief executive, Ross Taylor, and chairperson, Bruce Hassall, are resigning this year.
