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Health food manufacturer Freedom Foods (ASX: FNP) has announced a $130 million equity raise to support accelerated nutritional ingredients manufacturing.
Founded in 1984 and listed on the ASX in 1985, the Sydney based company plans to accelerate the development and sales of several key ingredients.
Of the $130 million, $65 million will come from an entitlement offer to shareholders, with the other $65 million coming from an institutional placement of new shares at $4.80 per share.
The funds will be deployed in two areas. First, $100 million will go towards the acceleration of capital expenditure programs in nutritional ingredients through 2019 and 2020, with the remaining $30 million going to support working capital requirements to meet demand growth.
The company says it is experiencing strong customer demand for its newly established nutritional ingredients capability.
Freedom Foods has already received commitments for the sale of a variety of nutritional ingredients through 2020 and beyond.
The $100 million specifically will be used to accelerate the manufacture for sale of these nutritional ingredients like Lactoferrin, Immunoglobin, and Micellar Casein.
The company is better known for the manufacture of breakfast foods like Messy Monkey's cereal, Barley+ muesli, Heritage Mill cereal, and Arnold's Farm Little Farmers cereal.
The company appears poised for bigger things, especially when considering the large international market for their products.
"The group continues to experience strong demand across its business activities in Australia, China, and SE Asia," says Freedom Foods.
"The growing demand in dairy, plant-based beverage, cereal and snacks reflects the positive impacts on the Group of structural change in the Australian dairy industry, the Group's expanded operational footprint, and increasing brand penetration and market share in key channels and categories in Australia, SE Asia and China."
"This unique capability provides for acceleration of our business, either through organic developments or through leveraging acquisitions. While this requires significant capital investment and patience, we will continue to invest to achieve this outcome, compared to an Australian food and beverage industry that has significantly underinvested over the past 20 years."
The company has indicated that net sales revenue for FY19 will be in the range of $480 million and $490 million, an increase of between $127 million and $138 million.
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