Select Harvests Launches AU$ 80 Million Capital Raising Initiative

Highlights:

• Capital Raising: Select Harvests is raising AU$80 million through an institutional placement and entitlement offer.
• Debt Reduction: Proceeds from the capital raise will be primarily used to reduce debt and improve the company's balance sheet.
• Growth Strategy: The funds will also support strategic initiatives aimed at enhancing almond production and processing capacity.

Business Update and Strategy Execution

Select Harvests Limited (ASX: SHV) has announced a significant capital raise of approximately AU$80 million through a fully underwritten entitlement offer and placement to institutional investors. The move aims to strengthen the company’s balance sheet, reduce debt, and fund strategic initiatives for long-term growth.

At the time of writing on September 20, 2024, SHV shares were trading at AU$4.50, and the new shares under the offer will be issued at AU$3.80 per share, a 15.6% discount to the last traded price.

Business Update

SHV is progressing with a strategy focused on cost reduction and organic growth to boost its horticultural productivity. The company forecasts an increase in almond yields by up to 15% by FY26, targeting a processing capacity of 50,000MT annually, up from the current 29,500MT for FY24. A strong almond crop and demand have already led to 79% of the 2024 crop being contracted for sale. Furthermore, SHV expects its FY24 earnings to improve significantly, with forecast EBIT in the range of $17 million to $19 million, and NPAT between $1.5 million to $3 million.

Capital Raising Details

The capital raise consists of an Institutional Placement and a 1-for-9.2 Entitlement Offer, targeting $80 million in total. This will include the issuance of approximately 21.1 million new shares, representing 17.4% of SHV's existing share capital. Proceeds will be used to reduce the company’s net debt, which is expected to range between $230 million to $245 million by FY24, primarily due to delays in freight logistics.

This capital raising is a pivotal step for Select Harvests to reset its balance sheet, improve cash flow, and further solidify its growth trajectory in the almond industry.

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