Solomon Lew sits out as Breville launches $104 million capital raise
Billionaire retailer Solomon Lew has not taken up his stake in global appliance manufacturer Breville's first-ever capital raise, with the ASX-listed company completing part of its $104 million raise on Thursday morning.
The $2.4 billion retailer also defied analyst expectations of a drop in sales throughout March and April, telling shareholders revenue from January to the end of April grew 32 per cent to $266 million.
Breville has completed its first-ever capital raise, fetching $94 million from investors.Credit:Louie Douvis
After placing shares into a trading halt on Wednesday morning, Breville announced the equity raise after market close, consisting of a fully underwritten $94 million placement and a $10 million underwritten share purchase plan.
Shares were priced at $17, a 9.1 per cent discount to the company's $18.70 Tuesday closing price, and underwritten by Goldman Sachs and UBS. A total of 6.1 million shares will be issued, representing 4.7 per cent of Breville's existing shares on issue.
Breville notified investors on Thursday the institutional raise was completed and had generated "significant interest" from existing shareholders, with chief executive Jim Clayton saying he was pleased with the strong showing of support.
"We see the success of the placement as a clear endorsement of Breville’s strong and resilient business and our long-term growth strategy, focusing on product development and international expansion," he said. Shares will resume trading today.
Mr Lew and his fashion retailer Premier Investments did not take up their stake in the capital raise, despite saying they were "highly supportive" of the raise and the company's future growth initiatives.
Due to their non-participation, Premier and the Lew family will have their a majority stake of around 32 per cent of Breville diluted. The veteran retailer has been a major beneficiary of Breville's impressive share price performance, having bought into the company at an estimated entry price of $1.50 per share.
Even after copping a coronavirus battering, Breville's last trading price of $18.70 marks a 1150 per cent increase from Mr Lew's buy-in price. His total stake in the appliance maker is worth around $720 million.
Breville also updated investors on its sales performance throughout the coronavirus pandemic, with sales up 32 per cent to $266 million for the four months ending April 30. Sales in March grew 25 per cent, and in April grew 21 per cent.
Profit margins stayed consistent with the 13.3 per cent achieved over the first half of the financial year. Sell-through sales, which occur when customers buy Breville products from a retailer rather than retailers purchasing products from Breville, remained strong as sellers ran down their inventories.
These results were better than Wilsons analysts had been predicting, telling clients on Monday they expected Breville's sales to decline in line with global peers such as Electrolux and Newell, which both experienced revenue drops of 30 per cent and 25 per cent respectively in April. Wilsons said at the time its confidence in Breville posting positive sales numbers had "deteriorated".
Despite the buoyant trade figures, Breville will implement a number of cost savings measures, including reducing marketing expenses and has also refinanced $373 million in debt facilities.