Transpacific begins $800m capital raising drive

Transpacific launches capital raising program it hopes will reap more than $800 million in new equity

Transpacific has launched the capital raising program it hopes will reap more than $800 million in new equity.

The Brisbane-based waste management conglomerate has today published the entitlement offer on a recapitalisation plan announced in June to pay down some $2.09 billion in syndicated debt and close out interest rate swap contracts.

The company has also scrapped plans to declare final dividends for the current and next financial year, with the board agreeing with investors on "certain restrictions" for the payment of future dividends.

The company tells investors it will launch a fully underwritten 1.77 for 1 accelerated pro-rata renounceable entitlement offer to raise some $737 million.

The remainder will be raised through a deal with WP Holdings, an affiliate of private equity firm Warburg Pincus, which will see $64 million placed with the group at $1.80 a share, a 50 percent premium to the entitlement offer.

The controlling Peabody family has also committed to take up $70 million in new shares under the institutional offer, while financial covenants will be renegotiated to provide "greater headroom" and reflect "more conservative expectations" for earnings growth.

The company plans to reduce debt by "at least" $704 million and extend the term of the balance of its bank debt in new four and five year tranches to July 2013 and July 2014. No refinancing of debt will be required until September 2012 under the plan.

The recapitalisation is subject to conditions, the company warns, with shares remaining suspended from trading until the completion of the institutional entitlement bookbuild. Trading is expected to resume on July 20.

Transpacific Executive Chairman Terry Peabody says the entitlement offer marks the final milestone in implementing the recapitalisation plan.

"The comprehensive capital restructure announced today will provide Transpacific with a more resilient capital structure in light of the current challenging macroeconomic environment," he says in a statement.

"We are pleased to have reached agreement with WP Holdings in terms of their proposed participation in the recapitalisation of the company and are looking forward to reaffirming our position as the leading waste management services company in Australasia."

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