Wesfarmers launches $2.8b equity raising

Wesfarmers has launched an equity raising to raise a minimum of $2.8 billion, comprising a three for seven accelerated pro-rata non-renounceable offer, at $13.50 per share.

In a statement, the company said the institutional component of the entitlement offer was fully underwritten to raise about $1.9 billion.

Additional proceeds of $900 million will be raised via placements to mutual funds managed by Capital Research Global Investors ($500 million) and Colonial First State ($400 million), each at $14.25 per share.

Shares in Wesfarmers have been placed in a trading halt and last traded at $16.83.

There was speculation and apprehension among investors that Wesfarmers would launch the raising well below the company's share price, with some saying the raising could be at $12 per share.

Wesfarmers intends to use the proceeds of the equity raising to repay bank debt and has commitments to extend a substantial proportion of facilities maturing in 2009 and 2010.

In relation to the $5 billion Facility B which matures in October 2010, Wesfarmers will repay $1 billion and has secured extensions for $3.4 billion of the remaining $4 billion, through to December 2011 and to December 2012 in equal installments.

As a result, Wesfarmers has reduced its term refinancing requirements over the next two calendar years from $6.4 billion to $1.6 billion and as at December 31 2008 has increased its undrawn debt capacity from approximately $1.2 billion to approximately $2.5 billion.

These measures provide Wesfarmers with increased flexibility to repay, refinance or roll-over all remaining debt facilities.