Hovis bakers to raise capital through IPO |
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Wed, 06 Jul 2005 02:35
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LONDON: Britain’s favourite baker RHM Plc, will raise capital with an Initial Public Offering (IPO) on the London Stock Exchange. RHM, home to Mr Kipling, Hovis Bread, McDougals flour and Robertsons jams, yesterday announced it has set its shares in a price band of 228p to 285p, valuing the company somewhere between £875m and £975m.
The offer has been underwritten at 228p by investment bank Credit Suisse First Boston. The company will be selling 45.4 million existing shares and 185.2 million new shares to guarantee an offer size of at least £561m. The IPO would sell 64 percent of the company’s enlarged share capital.
33 percent of the stake in the company will continue to be owned by private equity group Doughty Hanson.
The IPO is part of the company’s plans to raise money to meet various obligations. About £125m will be contributed towards its pension fund deficit; proceeds will also be used to repay RHM’s securitised debt facility and purchase the £472m loan notes that were issued to Doughty Hanson when they acquired RHM.
The IPO opens at the exchange on July 19th and shares will be fully listed on July 22nd. The issue has already attracted institutional interest. Jan du Plessis, chairman of RHM, said the group plans included restructuring and various cost saving measures which are expected to drive financial performance.
Part of these savings will be reinvested towards new product development, current brands, new technology and HRM to enhance profitability. The company said it was also likely to announce dividend totalling £55m for the current year to April 2006.
Many of the company’s products are household brands with 98 percent of homes in the UK using at least one of its products. Among its other brands are Bisto gravy, Saxa Salt, Paxo stuffing and Sharwoods. RHM also caters to retailers like Marks & Spencer and supermarket chains like Asda, Waitrose and Tesco with own-label products.
The company employs over 16,000 people across the UK.
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