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?

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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