Contact's five-year 8% bonds raised $550 million, from an oversubscribed $300 million offer; while institutional investors provided Fletcher with $406.5 million and Kiwi Income Property Trust with $50 million.
ABN Amro Craigs broker Chris Timms said the Contact bonds were "straightforward" and attractive for investors at 8%, while the institutional investors provided Kiwi Income and Fletcher with capital to underpin balance sheets, at the same time increasing their stake in the respective companies at a discount price.
Fletcher completed its overnight $406.5 million underwritten new-share issue by Thursday morning.
But after coming off the trading halt, its shares in the past two days remained down 5%, trading about $5.84 yesterday.
Market sources understood that while the Fletcher issue was well supported by New Zealand and Australian institutions, the latter may have had greater access to the stock.
Similar to other companies, Fletcher wants to boost its balance sheet with additional funding; so its debt-to-equity ratio falls from 41.3% to 35.2%, allowing it to pay off some of its $2 billion debt and avoid breaching banking covenants.
Apart from signalling a cut to its dividend policy, Fletcher this week revealed plans to restructure operations, which may cost local jobs.
It said it would probably suffer $200 million in write-offs, associated mainly with its troublesome US Formica division, The New Zealand Herald has reported.
Shares in Fletcher went into a trading halt on Tuesday at $6.20, and after the institutional placement reopened on Thursday to slip almost 6%, closing about $5.83.
Mr Timms said it was not surprising the share price had fallen, given the discount of 85c between $6.20 and issue at $5.35, but otherwise Fletcher had done well in the capital-raising move.
The $406.5 million of new shares, at $5.35, were at a 12.5% discount, plus Fletcher had an additional offer yet to go out of up to $100 million new shares for shareholders, with up to $60 million being underwritten, and capped at $100 million.
If the $100 million is not achieved, there is a further top-up offer of $20 million to a small number of eligible shareholders.
Mr Timms said shareholders on the company register at April 8 would be sent details of the further $100 million offer, which they could take up to a maximum of about $11,500 each.
Forsyth Barr broker Peter Young said he believed the up to $505 million issue of new shares would be well supported, and it was a prudent move by Fletcher.
"It will strengthen its balance sheet and eliminates the risk of another equity-raising if trading conditions deteriorate further," Mr Young said.
However, the placement diluted Forsyth Barr's 12-month target valuation from $10.03 to $9.25, but maintained its "buy" recommendation on the stock.
ABN retained its "hold" recommendation on the stock and its 12-month target price of $6.39.
• Both brokers' financial disclosure documents are available on request.
