Freedom Foods is raising $200 million to boost the capabilities and capacity of its plants in Ingleburn, NSW and Shepparton, Victoria and to accelerate its growth strategy.
$120m will go towards factory upgrades - such as enabling the producton of yoghurt and a new plastic bottle capability - and another $75 million of the capital will go on adding balance sheet flexibility for growth, including working capital requirements and potential acquisitions and alliances.
The ASX-listed company plans to raise $100 million from institutional investors and another $100 million from eligible shareholders at $4.80 a share.
The company already has the largest UHT processing capability in Australia, and says it's seen a “significant increase in forward demand” for its branded products.
The funds raised will provide for an acceleration of capacity to meet increased demand for UHT dairy formats; new packaging and product formats including a plastic bottle capability and yoghurt; and increased investment in capability to produce a range of high value added nutritional products, the company said.
“The capability will include a significant expansion of protein fractionation and drying capability and blending and packing capabilities for sports, adult and infant nutrition products,” Freedom Foods said.
“Increasingly, our key brands “Australia’s Own” and “Freedom Foods” will be at the forefront of driving our returns from our innovation and manufacturing capabilities in Australia and international markets.”
Freedom Foods said it is developing a "unique supply and manufacturing footprint in its key categories, compared to an Australian food and beverage industry that has significantly underinvested over the past 20 years".
“We believe the ability to control supply and manufacturing inputs and deliver innovation more quickly across a range of product formats for our brands and our key customers will be a key strategic advantage in the medium to long term, particularly in adding value to Australia’s unique agricultural grain and dairy supply base.”
Freedom Foods also said the completion of its new plant and dairy beverage capabilities at Ingleburn in Sydney would result in a “material increase in sales and profitability over the medium term”.
“With a large and significantly increasing base of dairy volume within the company, the focus is on driving the dairy business towards specialty and high value-added products.
“The development of a specialised nutritionals platform at Shepparton aligned to the dairy UHT operations will provide for protein standardisation and the ability to separate milk into industrial grade pure protein components for use in our branded products and for sale to key strategic customers.”
Freedom Foods is expecting its 2018 net sales revenues to be in the range of $360 to $380 million, up 40 per cent on 2017.
