Australian Agricultural Company (AAC) has announced a $299 million capital raising to diversify its business strategy away from primary production and strengthen its balance sheet.
In a statement to the Australian Securities Exchange, AAACo said this would enable a focus away from primary production and towards vertical integration of its beef business, including downstream processing and direct access to export markets, particularly in Asia.
"AACo's current balance sheet position limits its strategic flexibility," the company said.
"AACo's strategy is to diversify away from capital intensive primary production by increasing its exposure to higher margin, less cyclical assets with a higher return on capital."
The group said $87 million from the raising was for capital expenditure and working capital requirements at its Darwin Abattoir.
The remaining funds would go towards debt reduction and refinancing, as well as freeing up a balance sheet primarily tied up with capital intensive and volatile primary production projects, the company said.
The raising includes a $219.2 million entitlement offer and $80 million of subordinated convertible notes maturing in 10 years' time.
Before the market opened, AAco shares were placed in a trading halt ahead of the announcement, last traded at $1.17.