Freedom Foods taps market for $130m, flags expansion

SARAH-JANE TASKER
MAY 23, 2019
The Australian

Freedom Foods Group is set to raise $130 million as it flags an expansion in its nutritional ingredients range and updates its revenue guidance.

The company (FNP) announced today that the equity raising was priced at $4.80 a share, which it said represented a 5.5 per cent discount to the volume weighted average share price of Freedom Foods over the past 20 trading days.

The offer includes a pro rata accelerated non-renounceable entitlement offer of one fully paid ordinary share for every existing 18 Freedom Foods shares to raise about $65m. Plus an institutional placement to raise about $65m.The company said the fully underwritten equity raising was supported by cornerstone investor Arrovest.

Freedom said the funds raised would predominantly be used to accelerate its growth strategy. That included $100m for the acceleration of capital expenditure programs in nutritional ingredients through 2019 and 2020.

The Australian-listed company said the plan to accelerate the business through organic developments or through leveraging acquisitions required significant capital investment and patience.

“We will continue to invest to achieve this outcome, compared to an Australian food and beverage industry that has significantly underinvested over the past 20 years,” the company said.

Based on current sales performance, the company said today that it expected its net sales revenue in 2019 to be in the range of $480m to $490m, which it said was an increase of 36 per cent to 39 per cent on last year’s sales revenue.

The company also outlined that it had commitments for the sale of all its available capacity in fiscal 2020 for these ingredients: Native WPI (powder), Micellar Casein (liquid) and Lactoferrin (powder).

“Pricing for these key ingredients has been achieved at or above initial business plan assumptions,” the company said.

Freedom Foods highlighted to investors today that it was increasingly well positioned to strategically build into becoming a major international food and beverage business with scale in its key platforms.

“This growing demand in dairy, plant-based beverage, cereal and snacks reflects the positive impacts on the group of structural change in the Australian dairy industry, the group’s expanded operational footprint, and increasing brand penetration and market share in key channels and categories in Australia, SE Asia and China,” the company said.