Capral to Move Forward with New Plan

Submitted by Jim Thesiger on 31 August, 2009 - 04:08

The struggling aluminum fabricator Capral (CAA) is to move forward with its recapitalisation plans with Guinness Peat Group Plc (GPG). The proposal that is worth of $47 million was announced on Friday. According to the recent plans, Capral will take on a $37.5 million placement at 25c per share, a one-for-one rights issue to raise $9.7 million and conversion of a $13 million loan from Guinness Peat Group to equity. The plan will reduce Capral’s debt to $14 million from $119 million and likely to reduce GPG’s stake in Capral from 76 percent to below 50 percent. Independent expert Lonergan Edwards & Associates termed the proposal as fair and practical.

According to the newly appointed managing director Phil Jobe, the recapitalisation represents the best option for Capral. Mr. Jobe also added that the future of Capral appeared pretty much promising after a poor performance for a number of years. A highly discounted Chinese imports led to a major hit for Capral business. The impact of the financial crisis is also considered as one of the major reasons for Capral’s business downturn. Construction of the extrusion and distribution facility at Bremer Park, Queensland, in 2004-05 was also sluggish to attain capacity something that led to high operating costs and poor customer service. However, the company is expecting to see things back on track after it appointment Phil Jobe as managing director.

Capral is already observing some improvements in Bremer Park, as considerable amount of fixed costs have been eliminated and there are signs the residential construction market might soon see recovery- the sector from which the company obtains about half its revenue. The company’s volumes are expected to go up if it wins its case of anti-dumping against aluminium extrusions imported from China. A large portion of the package, including the notes acquisition, share consolidation, placement and Mr. Jobe's options deal depends on the authorisation from shareholders.