KWM helps industrial chemicals manufacturer cook up $600m in capital raising under COVID-19

King & Wood Mallesons (KWM) has assisted industrial chemicals, explosives and fertilisers manufacturer Incitec Pivot Limited (IPL) on a $600m capital raising.

The deal consists of an underwritten placement, along with a non-underwritten share purchase plan that could generate another $75m, according to the Mining Journal. The equity raised will be used to prop up IPL’s balance sheet, as well as fortify the company through the current economic environment.

In the process, IPL could see its pro-forma total liquidity hit $1.73bn and net debt fall to $1.3bn.

IPL CEO Jeanne Johns told the Mining Journal that the company has developed a COVID-19 response plan that could see the company saving $60m through “cost discipline initiatives, and reductions and deferrals in capital expenditure.” Moreover, the company has announced that it would not be paying out an interim dividend in the first half of the 2020 financial year.

The capital raising transaction was completed “concurrently with IPL’s half year results,” and the financial flexibility accorded as a result would also enable IPL to entertain “disciplined organic growth opportunities,” KWM said.

“Raising capital in the COVID-19 environment can be challenging.  The success of IPL’s equity raising is a clear endorsement of its businesses and long-term strategy,” partner Will Heath said.

Heath led the firm’s team on the transaction alongside partner Diana Nicholson.

KWM has advised on many capital raisings related to the COVID-19 pandemic since March, including a $700m raising for Flight Centre. The firm also acted as Australian legal counsel in Auckland Airport’s NZ$1.2bn raising effort last month.

“COVID-19 has caused regulators to re-write the rule book for capital raisings.  At KWM, we have consistently advocated on behalf of our clients for capital raising rules that are clear and balanced, and which do not hinder the efficient operation of capital markets,” Heath said.