BELLAMY'S TRANSFORMATION BEGINS WITH FIRST ROUND OF CAPITAL RAISING

BELLAMY'S TRANSFORMATION BEGINS WITH FIRST ROUND OF CAPITAL RAISING

INFANT milk formula supplier Bellamy's (ASX: BAL) has generated $14.3 million from the institutional component of its capital raising, as it begins a major overhaul of its operations.

Bellamy's says there has been a 96 per cent take-up rate for the initial stage of the 5-for-38 entitlement offer which closed yesterday, with the retail component set to open next Tuesday and will close on Thursday 29 June.

The company, whose shares will resume trading on Thursday following a two-day halt, aims to raise a total of $60.4 million to acquire a canning facility it hopes will help improve margins and satisfy Chinese regulatory demands.

The troubled dairy company is using the funds as part of a major overhaul which will result in it taking control of the Camperdown canning facility in the Melbourne suburb of Braeside and recast its supply deal with sector giant Fonterra.

Bellamy's says the canning facility deal, which means it will acquire 90 per cent of that business for $28.5 million, was "one of several key initiatives that would underpin the company's turnaround plan".

The facility is commercially licenced in China and will give the company scope to sell its products in that country.

"The acquisition of Camperdown strengthens our strategic position by increasing control of our supply chain and the CFDA registration process," says Bellamy's CEO Andrew Cohen.

"The acquisition will help build our brand credibility with trade partners and consumers. We believe this is an attractive commercial investment."

The company also says it had "reset" its supply deal with dairy processor Fonterra Australia. The binding agreement will cost $27.5 million and bring increased operational flexibility, it says.

The transactions are expected to impact on the company's forecasts and it now expects to post an EBIT loss of between $9.5 million and $14 million for the second half, up from its previous guidance of between $9 million and $13 million.

Analysts have welcomed the company's planned transformation.

Before the trading halt, BAL shares were $5.76, down from a high last year of around $15.00.

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