Nuplex scuppered a $110 million capital-raising book build last week, which appeared not to have found favour with institutional or small investors, and launched a $132.8 million rights issue, a total 577.6 million new shares at 23c each.
It is fully underwritten by First New Zealand Capital Securities.
Nuplex has a worrying $NZ400 million of debt on its books, but with a successful $132 million issue that will diminish to $275 million, giving confidence to the market as its debt-to-equity ratio will drop from 52.3% to a more conventional 37%, ABN Amro Craigs broker Chris Timms said.
"The shares were knocked around quite a bit because of concerns over their level of debt.
There will be investors buying in anticipation the share value will be up after the rights issue," Mr Timms said.
Shares in Nuplex hit a low on Friday of 35c before closing at 51c, and yesterday were trading at almost three times the Friday low around $1.03.
Mr Timms said that for a shareholder with 10,000 shares, taking up the rights offer would cost about $16,000, prompting the likelihood of "heavy trading" on the NZX of the rights in the 14-day trading period which expires on April 15.
Those who let the rights issue lapse would see a "severe dilution" in share value as the number of shares on issue would rise from 82 million to more than 575 million, Mr Timms said.
First New Zealand Capital has an option to call on a further 99 million shares at 23c each, for five business days after the offer closes on April 1, as part of the underwriting arrangements.
