By Darren Gray
Investors have jumped into the infant formula company Bellamy's after it emerged from a two-day trading halt, rocketing the shares up by almost 13 per cent to $6.50 in trading on Thursday.
The surge in the price of Bellamy's shares is a strong backing of the latest moves to overhaul the embattled company, which were unveiled in a statement to the ASX on Tuesday.
After a turbulent period late last year and early this year for the company, which saw Bellamy's shares plunge below $4 in January as its infant formula lost Australian market share and it revised its China sales down, the latest moves continue the company's stabilisation plans.
The new plan will see Bellamy's buy a 90 per cent stake in Camperdown powder, which owns a canning facility in the Melbourne suburb of Braeside, and a "re-set" of its supply contract with dairy processor Fonterra, at a cost of $27.5 million.
Shares in the infant formula company Bellamy's surged by almost 13 per cent on Thursday.Credit: Kate Geraghty
It also announced a $60.4 million capital raising, and outlined where the money would be spent. Before the market opened on Thursday, Bellamy's told the ASX that the institutional component of the $60.4 million capital raising had been completed.
"The Institutional Entitlement Offer had strong support, with a take-up rate of approximately 96 per cent," it said, and had raised gross proceeds of about $14.3 million.
A spokesman for the company told Fairfax Media on Thursday: "The company is very pleased with the level of participation by institutional investors, and the take-up rate suggests that they were supportive of the strategy announced earlier this week."
The retail component of the Entitlement Offer will open on June 20, and close on Thursday 29 June.
In a research note to clients released by Citi after Tuesday's announcement, entitled "Credit where credit's due", Bellamy's changes earned praise from analysts.
To participate in the retail entitlement offer, at an offer price of $4.75 per new share, eligible investors had to own shares in Bellamy's at 7pm on Thursday, 15 June.