CSR joined the new cash raising club yesterday, announcing plans to raise up to $482 million in new capital through a share placement and rights issue.
The issue came after the company requested its shares be suspended after copping a query from the ASX about a sharp share price drop.
CSR asked for the trading halt to be maintained until tomorrow at least.
The building products, sugar and aluminium group says it will make $125 million institutional entitlement offer, and a $357 million non-renounceable entitlement offer to all shareholders on a one for four basis.
The company said $304 million of the total raising was underwritten.
"We strongly believe in the market positions of our divisions and today’s initiatives represent a prudent, proactive step to strengthen CSR’s overall position during this period of uncertainty," managing director Jerry Maycock said in a statement to the ASX.
CSR said the issue would result in a reduction in gearing from 44.5% to between 28.8% and 34.8%, depending on the take-up of the Retail Entitlement Offer;
The Dividend Reinvestment Plan for the interim 2009 financial year, ending March 30, final dividend will now not be underwritten. It said that company "expects to pay out approximately 60–80% of net profit after tax as an ongoing dividend policy".
The Offer is being conducted at a fixed price of $1.40, compared with the $1.80 closing price last Thursday, a big discount of 22%.
"Shareholders who do not take up their Entitlements in full will not receive any value in respect of those Entitlements that they do not take up.
"Shareholders who are not eligible to receive Entitlements will not receive any value in respect of Entitlements they would have received had they been eligible.
"All New Shares issued will be fully paid and rank equally with existing CSR ordinary shares on issue, except that the New Shares will not qualify for the interim dividend of 6 cents per share in respect of the period to 30 September 2008.
"Shareholders who have previously elected to participate in the DRP with the opportunity to withdraw their DRP election in respect of the interim 2009 year dividend.
“A DRP Withdrawal Form will be sent to Shareholders shortly. Shareholders wishing to withdraw from participating in the DRP in respect of the interim 2009 year dividend will need to complete and return this form by 5.00pm (AEDT) on 1 December 2008.
“If they still wish to participate in the DRP, they do not need to take further action.
"The proceeds from the Offer will be used to reduce CSR’s net debt. Given the current market volatility, CSR’s Board and management believe the Offer will provide a number of benefits to CSR: – significantly strengthens CSR’s capital position and coverage ratios:
"It reduces pro forma net debt from $1,342 million to between $868 million and $1,047 million; reduces pro forma gearing from 44.5% to between 28.8% and 34.8%; increases pro forma EBITDA/interest cover from 5.2 times to between 8.1 times and 6.7 times and substantially reduces CSR’s refinancing risks through to the end of the 2010 financial year."
