Sims to tap market for $475m
Sims Metal Management Limited (SGM) announced a proposal to raise about $400 million in capital via a fully underwritten placement. The metal recycler also said it planned to raise $75 million through a share purchase plan (“SPP”).
Sims said the purpose of the capital raising was to provide financial flexibility to pursue its growth agenda for both the Metal Recycling division and its Sims Recycling Solutions (“SRS”) business.
The company added that it is looking to continue its acquisition growth strategy as opportunities become available.
”The ability to move quickly and maintain a conservative financial profile is a significant competitive advantage in leading the consolidation of Sims Metal Management’s key markets,” Sims Metal said.
“The company also has a strong pipeline of value accretive capital expenditures, including the global roll-out of metal recovery technology and specific facility construction initiatives.”
The company said under the institutional placement shares would be offered at $21.00 each, or a 5.4% discount to the last closing price on 19 November 2009.
Under the SPP the issue price of shares would be the lower of the institutional placement price and the 5-day volume weighted average price of shares traded on the Australian Securities Exchange up to and including the last day of the offer period.
Sims Metal said it intends to roll-out globally third generation downstream shredder technology to facilitate greater recovery of valuable non-ferrous metals and reduce waste going to landfill, while the company is also continuing to organically strengthen its core businesses of Metal Recycling and SRS.
CEO, Dan Dienst, said recent acquisitions have been integrated effectively and are performing well under the circumstances.
“The specific technology efficiency opportunities identified are expected to yield returns materially in excess of the cost of funding,” Mr Dienst said.
“Looking to the future, through the capital raising, the Company will be in an enviable position to strengthen its existing business and fund acquisition growth opportunities, which will enhance and expand its industry leading position.”
The company said initially, proceeds of the equity raising would be used to repay debt.
Sims Metal Management shares were halted at $22.20.
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