Boral seeks $490m, writes down $289m

Building materials supplier Boral Ltd is seeking nearly $500 million from shareholders to expand its holdings in Australia and the US, as part of a plan to restructure and streamline its businesses.

But the company has also booked a one-off $289 million impairment in fiscal 2010 on underperforming assets.

Boral has launched a $490 million capital raising to bolster the company's core strengths of cement, construction materials and plasterboard in Australia and bricks, roof tiles and masonry in the US and Australia.

Chief executive Mark Selway upgraded Boral's profit guidance to a range of $123.5 million to $132 million, excluding the impairments, which he said was in line with earlier guidance of $123.5 million issued in February.

"The review has been very comprehensive and has crystallised the markets and geographies where the group has the potential to achieve long term growth and deliver sector best returns," he said.

UBS is the lead manager and sole underwriter for the equity raising, which will have an issue price of $4.10 per share, a 16 per cent discount on Monday's closing price of $4.89.

Shares in Boral remain in a trading halt while the company conducts the capital raising.

Mr Selway said Boral would spend about $80 million of the funds to upgrade its Melbourne plasterboard plant.

Another $200 million would be invested over three years in Peppertree hardrock quarry near Marulan to replace its Emu Plains quarry which is nearing the end of its life.

$US75 million ($A89.36 million) would be used to acquire the remaining 50 per cent share of US concrete roof tile business MonierLifetile.

"The $490 million will assist the group in achieving our aspirations for growth," Mr Selway said.

The $289 million impairment consists of a $79 million write-down of construction related businesses in Australia and a $17 million write-down of the company's Thai construction materials business.

It includes asset write-downs of $136 million in Australia, including the closure of Penrith Lakes quarry, and $43 million in the US where Boral will close four mothballed brick and tile plants.

Another $14 million is included for a corporate restructure to reduce the company's seven operating divisions to five.

Mr Selway said he used an approach developed during his time working in the North American automotive market, to assess Boral's business structure.

"We are using the same concepts here at Boral, tailored to suit our industry," he said.

"The improved focus has allowed the group to simplify our internal structures and several key organisational changes have been made to help facilitate the execution of our plans."

Mr Selway said Boral was the market leader in brick and tile in the US and had to wait for the US housing market to improve.

"MonierLifetile is currently in losses, but it is capable of creating great returns as and when the US market returns to form."

The capital raising would also strengthen Boral's balance sheet, giving it access to funds for potential future purchases.

Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.

• Bookmark this page
• Share this article
  •  
  • facebook
  • slashdot
  • digg
  • Reddit
  • stumbleupon
  • linkedin
  • twitter
• Got more on this story? Email CIO
• Follow CIO on twitter

• Share
  Share this article

  •  google+
  • facebookfacebook
  • slashdotslashdot
  • diggdigg
  • RedditReddit
  • stumbleuponstumbleupon
  • linkedinlinkedin
  • twittertwitter
• print
• email
• Bookmark