Zotefoams raises £8.8m to fund US investment

Zotefoams raises £8.8m to fund US investment
By PRW Staff
Posted 12 September 2014
Zotefoams, the stock market listed producer of speciality foams, has placed nearly four million shares in order to raise £8.4m net of expenses to help fund investment in its Walton plant in the US.

The Walton investment would total $22m (£13.5m), the Croydon-based company said, with the balance being funded via debt, operational cash flow and what it called “local government incentives”.

Explaining its decision to invest in the US rather than its UK operation Zotefoams said: “Having carefully considered the two location options, the board has decided to invest in [our] existing wholly-owned US manufacturing site in Walton.

“The investment will comprise high-pressure gassing capacity along with supporting extrusion capacity and related infrastructure, making the Walton site self-standing for most products sold into the North American market.”

The Walton site currently runs only the final expansion part of its three-stage manufacturing process with intermediate material being shipped over from Croydon.

Zotefoams said certain small volume polyolefin products, “those with unique raw material formulations and HPP products”, would continue to be manufactured at Croydon “for the time being”. A spokesman for the group said the group said it was “clearly committed” to the Croydon operation, which employs around 200 staff.

And in a statement Zotefoams said: “The investment will also provide [us] with the ability and flexibility to pursue future investment opportunities, including in its fast-growing HPP business, in either the UK or US, with further investment at either site cost effective and determinable by geographical need for capacity.

The group said the share placing, at an issue price of 220p, would raise £8.8m before expenses and represented just shy of 10% of its existing issued share capital. It would be earnings dilutive before the realisation of the investment’s returns, it added.

http://m.prw.com/search_story.html?cat=1&id=5602&q=Zotefoams

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