Construction materials supplier Boral says $210 million from the sale of its interest in cement maker Adelaide Brighton Ltd will be used to pay off debt.
Boral has sold its entire 17.6 per cent stake in Adelaide Brighton, of 107.8 million shares, for $1.95 each for a small profit.
"The proceeds from the sale of Boral’s 17.6 per cent stake in Adelaide Brighton will be used to reduce Boral’s bank debt and will improve Boral’s gearing," Boral chief executive Rod Pearse said.
In its first half report in February Boral reported net debt of $2.184 billion and a gearing level of 79 per cent, which was above the company’s target range of 40 to 70 per cent.
The sale of the Adelaide Brighton stake may stave off speculation Boral needed to conduct a capital raising, a suggestion repeatedly denied by Mr Pearse.
"Our financial metrics are well within our covenants, we don’t anticipate a breach of covenants," he said in February.
Boral said on Wednesday the sale price of the Adelaide Brighton shares represented a 6.5 per cent discount on the five-day volume weighted average share price to May 5.
The stake was being sold down to institutional investors, it said.
Boral bought its stake in Adelaide Brighton in December 2003 at $1.55, and subsequently made an off-market takeover bid for all of the Adelaide Brighton’s ordinary shares.
Source: Australian Associated Press Pty Ltd