(Adds details on standby facility and background)
April 17 (Reuters) - New Zealand’s Fletcher Building Ltd on Tuesday said it will divest its Formica and Roof Tile Group businesses and raise NZ$750 million ($552 million) through an entitlement offer as it addresses huge cost overruns in its commercial building unit.
The country’s largest builder also said it has set up a new standby banking facility of NZ$500 million that, combined with the proceeds of the entitlement offer, would be enough to redeem all U.S. Private Placement and bank syndicate funding associated costs if required.
In March, Fletcher said lenders had extended waivers for breaches of its financial covenants until the end of May as the company sought to renegotiate its agreements.
The spin-off of the laminates and tiles business of its international segment and the entitlement offer at NZ$4.80 per share comes on the back of the company reporting half-yearly losses hurt by its commercial unit’s cost overruns.
Fletcher also maintained its estimate for earnings before tax estimate of NZ$680 million - NZ$720 million for the full year.
The New Zealand Stock Exchange placed Fletcher’s shares in a trading halt in the wake of the announcement and before the market opened for the day.
$1 = 1.3589 New Zealand dollars Reporting by Chandini Monnappa in Bengaluru Editing by Hugh Lawson and Lisa Shumaker