Fisher and Paykel Appliances is expected to announce restructuring plans today - with speculation mounting Chinese manufacturing giant Haier is taking a 20% stake - and the whiteware manufacturer has also bought forward release of its full-year results 24 hours to today.
Appliances, whose debt levels are escalating, is coming to the end of a month-long agreement with its bankers over renegotiation or payment of about $80 million in loans, which the banking syndicate has rolled over until the end of May.
There has been wide market speculation for several weeks Appliances would be seeking to raise new equity through a rights issue, bonds or share placement.
It was understood investment bank First NZ Capital was on Monday talking to key institutions about underwriting the capital raising, thought to be up to $200 million, with Haier taking a separate 20% stake, The New Zealand Herald reported yesterday.
Appliances put itself on a trading halt on Monday, which is expected to be lifted this morning. Broker Forsyth Barr has estimated Appliances requires $150 million to $200 million, while ABN Amro Craigs put the range higher at $180 million to $230 million.
ABN Amro broker Peter McIntyre said Appliances needed not only capital but a cornerstone shareholder, and speculation Haier was considering a 20% "was not surprising".
"Haier would be getting in at bargain-basement prices. China [companies in general] have been into issues in Australia, especially the resource sector, " Mr McIntyre said.
The attraction for a Chinese mass producer in having a stake in a high-end niche market manufacturer included having a high-end product image and access to distribution, research and development, Mr McIntyre said.
He said Appliances' net debt had been forecast to be up to $570 million as at March of this year, which was a 63% increase on its first half. However, through savings and asset sales that debt was likely to fall by $180 million.
"At best Appliances would need to raise $180 million of new capital and at worst-case scenario, more than $230 million," Mr McIntyre said.
He said any cash raised would go directly to the banks, who were "playing hard ball to protect their own position".
If $180 million was raised it would leave Appliances with $246 million net debt and with $230 million raised, a net debt position of $225 million.
The depreciating New Zealand dollar had "grossly inflated" Appliances' foreign currency-based debt, up by $122 million, pushing its target debt range from 25%-35% to 43%, Mr McIntyre said.
Appliances has laid off more than 1000 staff during the past year in New Zealand, Australia and the United States, including the loss of 430 jobs with the closure of the 23-year-old plant in Mosgiel, near Dunedin, as it moved manufacturing to lower-waged economies.
• Yesterday, Appliances chief executive John Bongard said the company had secured distribution deals with American retailer Sears through 147 outlets across the United States.
