It is now confirmed that, as we reported yesterday, that Haier has bought a 17% stake in Fisher & Paykel Appliances who's shares jumped by a record in Wellington trading after the deal with Haier Group was confirmed and arranged new bank funding.
Shares in the company, before today the second-worst performer in New Zealand's benchmark stock index, jumped 56 percent after Fisher & Paykel said China's biggest appliance maker will invest NZ$46 million for a 17% stake and participate in a rights offer raising at least another NZ$143 million.
Fisher & Paykel posted a NZ$95.3 million full-year loss today after sales in Europe and the U.S. plunged and it was forced to sell properties to reduce debt.
F&P had warned investors in February it may need to raise capital after a plant closure in the U.S. and a slump in the New Zealand dollar increased debts incurred shifting output overseas.
The strategic partnership agreed with Haier will open new markets and sets Fisher & Paykel up "for the very long term," Chief Executive Officer John Bongard told analysts and journalists.
Haier will distribute Fisher & Paykel brands in China, and it will reciprocate in New Zealand and Australia, he said. Joint procurement, marketing and production will lower costs over time and expand each company's geographic reach, he said.
Bloomberg reports that as a part of today's refinancing package, investors, including Haier, will be offered another share for every one held at 41 N.Z. cents each. The offer, underwritten by the local units of Deutsche Bank AG and Credit Suisse, is 38 percent less than the stock last traded at on May 22. With Haier's initial investment, the company will raise at least NZ$189 million and as much as NZ$201 million.
Fisher & Paykel, which licenses its technology to Whirlpool Corp., also arranged a new NZ$575 million, three- year banking package.
About NZ$165 million of the share-sale proceeds will be used to pay off debt. Inventory reductions and about NZ$106 million expected from property sales this year will reduce the company's debt by two-thirds to NZ$153 million by March, Chief Financial Officer Mark Richardson said on the conference call.