Fletcher Building (FBU) Capital Raise summary

Equity raising and financial stability

• Announced NZ$700 million equity raising via a NZ$282 million institutional placement and NZ$418 million accelerated non-renounceable entitlement offer to strengthen the balance sheet and improve financial resilience.

• Pro forma leverage at June 2024 expected to reduce from 1.99x to 1.22x, near the bottom of the 1x–2x target range, supporting investment-grade credit rating.

• Proceeds will be used to reduce net debt from NZ$1,766 million to NZ$1,088 million on a pro forma basis.

• Offer price is NZ$2.40 per new share, a 12.9% discount to TERP and 17.0% discount to last close, with about 292 million new shares issued (37% of existing shares).

• Sizing of the raise based on sufficiency analysis to ensure adequate headroom through FY25, considering market volatility.

Market conditions and operational response

• Experiencing 10–15% year-on-year volume declines, with FY25 market volumes in NZ and AU expected to be lower than FY24.

• Aggressive cost reduction program increased to NZ$180 million in gross overhead costs targeted for FY25.

• Cost out program is a bottom-up exercise, with each business unit assigned granular targets.

• Restructuring costs of NZ$15 million expected this year to deliver the cost reductions.

• Focus on working capital and CapEx management to respond to current market conditions.

Strategic initiatives and portfolio management

• Progress made on board and management appointments, with only the permanent chair role outstanding.

• Divestment of Tradelink signed, with settlement expected by month-end, strengthening the balance sheet.

• Capital raise preserves optionality for portfolio review and reduces pressure to sell assets below intrinsic value.

• Ongoing process for potential capital partnership in the Resi business, with no immediate conclusion expected.

• Strategic review planned, to be completed after the start of next year, focusing on deep analysis of business units.