Contact Energy, NZ to raise $317 Million to fund renewable energy projects
New Zealand's Contact Energy announced on Monday that it will raise NZ$525m ($317m) in new equity to fund an array of renewable energy projects. The company is accelerating its growth as part of its long-term, "Contact31+" strategic plan.
Contact stated in a press release that the fundraise included a fully-underwritten NZ$450,000,000 institutional placement as well as a non underwritten retail offer?of up NZ$75,000,000.
Around 60 million new shares will be sold at NZ$8.75 each, which is an 8.8% reduction from Friday's closing price.
The electricity 'generator and retail said that proceeds would allow it to start pre-final decision drilling (FID) at its Tauhara 2 geothermal project, and advance its Glenbrook Battery 1.0 and Glorit solar developments. These are key plansks of a pipeline aimed at boosting renewable generation capacity in the coming decade.
The shares were put on hold pending the completion of the place.
Grant Swanepoel is an equity research analyst with Jarden. He said that New Zealand's electricity system already has more than 80% renewable energy. Contact reflects this mix. However, the company is growing its portfolio a little faster than its competitors.
Swanepoel said that the projects allocated for funding had already been largely factored in to the company's plans and did not materially change its capital expenditure forecast.
He said that the equity raise was primarily to allow its balance sheet some breathing space, as its net debt to earnings ratio is expected to reach credit rating agency limits by 2031.
Contact has reaffirmed that it will increase its total dividend to 40 NZ cents a share in fiscal year 2026, and to 41-42 NZ cents a share in fiscal year 2027.
(source: Reuters)
