The key question in coming days will be the impact and effect on the value of shares of any rights issue for existing shareholders.
Fisher and Paykel must outline a plan to shareholders to maintain confidence, in order to underpin its balance sheet and claw its way back into the black.
The whiteware manufacturer has slashed more than 1000 jobs in New Zealand, Australia and the United States during the past year.
This was in a bid to increase profit margins by manufacturing in low-wage economies such as Thailand and Mexico; to a backdrop of foreign exchange losses, rampant global metal prices and Asian-based competition in shrinking or static markets.
The likelihood of an imminent capital-raising announcement is prompted by a looming banking deadline for Fisher and Paykel to renegotiate or pay back $80 million in loans in 10 days by April 30.
During the past year, its share price has had a high of $2.75, a low of 36c and was trading around 46c yesterday.
At $2.75, its market capitalisation was $798 million, while at 46c, it stands at $133 million - an 83% drubbing.
ABN Amro Craigs broker Peter McIntyre said because of losses in the exchange rate between the New Zealand dollar and the US greenback, Fisher and Paykel's debt had "ballooned out", noting its free cash flow statement in recent reports was negative $100 million.
"[Fisher and Paykel] Appliances will have to do something and a rights issue is the most obvious choice.
An issue is needed to take the place of that short-term commercial bill debt facility, which is harder to get, or just not there in some instances," Mr McIntyre said.
He estimated that a rights issue by Fisher and Paykel of two new shares for each existing share, at a discounted 25c per share to make the offer attractive to existing shareholders, could potentially raise about $150 million.
However, he cautioned such an issue could have a negative effect on the value of shares, a sentiment being keenly assessed by most brokers.
Company chief executive John Bongard, who is out of the country this week, has repeatedly parried questions of capital raising and given no indication of a timeframe, but reports in recent weeks have named broking houses involved and outlined detailed options.
Other companies in New Zealand have successfully raised more than $1.1 billion in recent weeks, through rights issues and bonds ranging from Xero's $23.2 million issue to Contact Energy's $550 million five-year bonds.
This has boosted cash flows and often paid off debt and diluted mounting debt-to-equity ratios.
Fisher and Paykel's debt-to-equity ration is 94% and Mr McIntyre said it was likely any rights issue would target debt repayment.
During 2008, Fisher and Paykel's actual free cash position - the difference between operational income minus capital expenditure - was -$20 million, but that is forecast to balloon out more than 12-fold to -$254 million this year, he said.
"Deferred investment decisions by households, not just in New Zealand but globally, not to replace their household appliances, is having an impact . . . [on Fisher and Paykel] Appliances," Mr McIntyre said.
Of increasing concern are forecasts Fisher and Paykel's working capital requirements for the present financial year are forecast to increase 80% from $231 million to $420 million, while its net debt levels would rise 95% from $231 million to $420 million.
"Arguably, this is one of the toughest of times for [Fisher and Paykel] Appliances in its history," Mr McIntyre said.
Fisher and Paykel's founding goes back to Dunedin 23 years ago.
Recently, it closed its Mosgiel site, with 430 redundancies, opting for offshore manufacturing.
The free cash flow had been affected by foreign exchange losses, mounting relocation costs and redundancies which are now "coming through on its balance sheet".
In November, Fisher and Paykel reported the cost of shifting manufacturing offshore had pushed it into the red for the first half of the financial year.
Those costs have been further compounded by the historical short-term "commercial bill" (lending) mechanism of banks, which at present is "not functioning" because of the global credit crisis, Mr McIntyre said.
