ProTen seeks to raise as much as A$30m to fund future growth

ProTen, an Australian chicken-farming business whose shares trade on New Zealand's Unlisted market, plans to raise as much as A$30 million in a private placement to fund future growth.

The Sydney-based company's shares were placed in a trading halt late Wednesday until June 9 or when the placement is completed, it said in a statement. It plans to raise A$25 million to A$30 million in equity from new and existing institutional and high net worth sophisticated investors. That's lower than the A$50 million the company flagged in November.

ProTen is Australia's largest independent contract grower of broiler chickens, or chickens grown for meat, supplying Baiada Poultry, Australia's largest chicken processor, according to its website. At its annual meeting in November, the company forecast underlying profit this year would increase 23 percent to A$5.3 million after gaining 13 percent last year. It said bird production had risen to 110 million kilograms and all its 172 growing sheds were in full production.

"Earnings and dividends are forecast to grow further into the future as more new farm investments are added and profit accelerates," chairman John Signal told the November AGM, which was held in Feilding. "ProTen now has multiple opportunities under consideration and has determined the scale and capital requirements for future growth will require new equity."

Signal said plans for new equity, coupled with a new tranche of bank debt, would provide the capital to build multiple developments simultaneously.

"The reasons the board has chosen to pursue this strategy is many fold; it allows some breath of investment, gives a recognisable scale to the activity, delivers increased earnings and will set up the business for a possible liquidity event in the future," he said, without being more specific.

ProTen chief executive Daniel Bryant today declined to provide more information about why the company was seeking to raise additional funds until after the raising is complete.

The company said in November that it expects strengthening demand for more farm production capacity, on the back of demand for protein.

"Chicken in particular is at the forefront of this protein play and the emergence of new Chinese demand for all protein forms has fundamentally changed supply and demand," Signal said. "ProTen has confidence in the protein production investment space and will continue to invest in new projects that deliver earnings and shareholder growth in this sector rather than diversify. "

Shares in ProTen last traded at 70 cents, valuing the company at $42.4 million.

(BusinessDesk)