Australia-Large Dairy investment.

AUSTRALIA-THE DAIRY INDUSTRY.

Warrnambool Cheese & Butter (WCB) has raised $105 million to buy its foreshadowed half stake in a new cheese company with National Foods.

The new joint venture, Australian Cheese Company (ACC), will own and run the cheese business of Dairy Farmers, which produces leading brands such as Coon, Cracker Barrel and Mil Lel.

The deal has been previously released to the market.

WCB has secured $50.6 million through a fully underwritten renounceable rights issue, and $55 million in debt from NAB.

The $50.6 million equity raising comprises a two for three renounceable pro-rata offer to raise the money through the issue of 26.6 million new shares at an issue price of $1.90.

It is underwritten by ABN Amro Morgans and Austock Corporate Finance.

The offer is a 29pc discount to WCB’s shares over the five days before the announcement and a discount of about 18pc to the theoretical ex-offer price.

WCB said shareholders who took up the offer may also apply for extra new shares under a shortfall facility.

The company aims to have the new shares trading by May 6.

Under the ACC joint venture, WCB and National Foods will own and operate the cheese manufacturing, cutting and wrapping operations of Dairy Farmers at Alansford, Jervois and Simpson.

WCB will supply ACC with most of its bulk cheese requirements, milk in accordance with similar agreements with Dairy Farmers, and high-level management services.

National Food will provide milk, services in sales and marketing, distribution and logistics, and management. WCB already provided much of the cheese for many Dairy Farmers’ cheese products.

In mid-afternoon trade, WCB was up 11 cents at $2.70.