Harvey Norman in capital raising

 

harvey norman bondiRetailer, Harvey Norman, is tapping investors for $120.7 million in a capital raising.

The electrical and furniture retailer has launched a fully underwritten renounceable share offer. Shareholders will be able to subscribe for one fully paid ordinary share for every 22 shares held.

Shares in the retailer slumped by nearly four per cent when details of the capital raising were announced in morning trade ahead of the company’s annual general meeting.

The stock recovered to be half a cent higher at $5.885 at 1107 AEDT.

Chairman, Gerry Harvey, told shareholders at the meeting that the capital raising would fund a dividend of 14 cents per share. He also vowed to keep the retailer’s loss making business in Ireland, saying it was expected to return to profit.

“We are going to get in front in Ireland,” he said in response to a shareholder question.

“Whereas we might have a loss this year, we don’t anticipate a loss next year.”

Katie Page, CEO of Harvey Norman, was also upbeat.

“This year, it feels a lot better. I’m more positive about Ireland than I have been for a long time,” she said.

Meanwhile, the Australian Shareholders’ Association is opposing Harvey’s remuneration being paid in cash only instead of a mixture of cash and shares. The remuneration report was defeated with 90,094,212 votes in favour compared with 282,459,120 against.

Harvey declared the motion was lost. Harvey Norman executives received generous pay rises in 2013/14 after the retailer increased its profit by 49 per cent.

Page’s remuneration package rose by 54 per cent to $2.8 million thanks to a higher salary and bonuses. Harvey received $1.1 million, up on the previous year’s $1 million, due to a $106,000 long term cash bonus.

COO, John Slack-Smith, and CFO, Chris Mentis’ pay also rose 14 per cent.

The pay rises reflected Harvey Norman’s improved profit in 2013/14, which rose to $212 million thanks to stronger sales and property values.

Harvey was upbeat about Christmas.

“There’s no reason to believe we shouldn’t have a pretty good Christmas,” he said.

“Our expectations are that this year will be fine.

“We don’t see the economy improving an awful lot.”

But the chairman said a pick up in home building would help Harvey Norman.

“Our profit should increase the way we’re going,” he said.

“Hopefully, that will happen.”

Page said a weaker Australian dollar, staying below 90 US cents, could see price rises.

“If the currency is sub 90 cents, you’ll start to see some inflation in our business,” she said.

AAP

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