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Metcash Looks To Raise $330m In Capital

Mitre10 Oz

Metcash, Australia’s leading wholesale distribution and marketing company with sales of over $14 billion in FY19, is understood to have put some aspects of its $270m turnaround strategy on hold, and is seeking $330m from investors to help fund new acquisitions and provide working capital and operational support for the retail network.

Metcash offered institutional investors shares at $2.80 per share - 7.9% less than the closing price of $3.04 on Friday - to raise the first $300m.

The remaining $30m is to be raised through a share purchase plan for other eligible shareholders. 

Short-term debt facilities from existing lenders has added an additional $180m to the figure.

Metcash will use the funds to pay down debt and ultimately help it achieve its 'MFuture' turnaround strategy, which will see the business invest $270m in refreshing its businesses and supporting its independent retailers.

Jeff Adams, Metcash CEO, told press (The Age and The Sydney Morning Herald) that some work has been put on hold amid the coronavirus pandemic: 

"Some of the store refreshes we've had to pause because, with social distancing in stores, we couldn't be sticking people in there doing work at this time," adding, "But there are other initiatives we've accelerated, so it's a bit of a mixture. Some are paused, but others we're carrying on."

Metcash operates through its food, alcohol and hardware businesses. 

The hardware division - Independent Hardware Group (IHG) - is the largest independent hardware group in Australia.  Brands within the group include Mitre 10 - the ‘mighty helpful’ hardware store and the largest independent network of hardware operators with over 300 stores, located in metro and regional areas across Australia, and Home Timber & Hardware, with a national footprint of approximately 180 stores with a strong Trade focus, highlighted by its ‘Go Where the Tradies Go’ brand focus.  

Furthertmore, IHG supports independent operators under the small format convenience banners Thrifty-Link Hardware and True Value Hardware, as well as a number of unbannered independent operators.  IHG also includes a full bathroom and kitchen appliance offer through the wholly owned Hardings business.

The MFuture strategy was created to help Metcash reduce costs and be more competitive against retailers including Coles and Woolworths.  

Investors were told that Metcash is looking to complete three acquisitions before the first half of its 2020-21 financial year: one in the hardware division and two in the liquor division.  All had been planned prior to the coronavirus pandemic and will help Metcash 'accelerate its growth plans'. 

Source : Insight DIY Team

Image : Emagnetic - 1471269623 

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20 April 2020

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