Loss-making live animal exporter Wellard is undertaking a share placement and entitlement offer as part of a $52 million capital raising it hopes will allow it to exploit a predicted improvement in trading conditions.
The firm - which in March cut its first-half loss by 25 per cent but was still $18 million in the red - on Monday the $6 million placement, $19.7 million entitlement offer and $26 million capital notes issue were necessary following an extended period of reduced margins and cash flow.
"As we expect an improvement in cattle supply over time, we need to be ready to capitalise on our competitive advantages in the marketplace if and when this eventuates." chief executive Mauro Balzarini said in a statement.
Wellard said it would set aside $20.8 million as working capital and spend $2.8 million to buy the 50 per cent of Chinese joint venture company Wellao Agricultural Co it does not already own.
Wellao - a 50-50 joint venture with Chinese-owned Fulida - plans to build two feedlots and an abattoir to process imported Australian cattle.
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The placement of 25 million new shares will be priced at 24 cents per security, with the fully underwritten non-renounceable pro rata one-for-four entitlement offer priced at 18.5 cents.
At 1209 AEST, Wellard shares were down 2.5 cents, or 10.2 per cent, at 22 cents.
