The Bega Cheese Ltd (ASX: BGA) share price has fallen by 6% since the start of the week when rumours began to emerge that it was raising $250 million in a capital raising.
Bega Cheese is one of Australia’s largest dairy businesses, supplying cheese under the Bega brand and also owns the Vegemite brand.
Why Is Bega Cheese Going Off?
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The reason for the capital raising is because the dairy company wants to pay down debt.
As announced recently Bega Cheese spent $250 million to acquire Saputo’s Dairy Australia’s Koroit dairy processing facility. That facility processes around 300 megalitres of milk into bulk and butter, commodity and milk powders.
Of the $250 million raised, $200 million has already been raised from institutional investors at $7.20 and $50 million will come from regular individual investors.
Bega Cheese’s Executive Chairman, Barry Irvin, said: “Bega Cheese has always had a commitment to maintaining a strong balance sheet and this capital raising ensures we are appropriately geared should further opportunities arise.”
Despite the current share price decline, the Bega share price is up 117% over the past five years, according to Google Finance.
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