Select Harvests (ASX:SHV) business update and capital raising

Select Harvests Limited (SHV) has launched a fully underwritten capital raising to raise approximately $80.0 million through a pro rata accelerated non-renounceable entitlement offer and a placement to institutional investors. The company's operational review has developed a strategy to execute its growth strategy and enact identified cost reduction initiatives. The strategy includes near-term organic growth opportunities to improve the productive capacity of SHV's core horticultural assets and target leadership in processing scale and efficiency. Select Harvests' 2024 crop is expected to be approximately 29,500MT, with a record volume of almonds sold to date supported by a strong crop and increasing pool of external grower almonds. The forecast FY24 Underlying EBIT is expected to be in the range $17m to $19m and Forecast FY24 Underlying NPAT is expected to be in the range $1.5m to $3m, supported by a forecast FY24 final almond price in the range $7.70 to $7.75 per kg. The company is undertaking the capital raise to repay debt, provide facility headroom, and increase processing capacity.

Executive commentary on market conditions and strategic initiatives

David Surveyor, Managing Director & CEO of Select Harvests, stated, 'The market conditions resulting from the lower than forecast California almond production, low carry-in, and declining bearing acres in California are improving the price with the forecast 2024 crop to be in the range of $7.70/kg - $7.75/kg. The strategic initiatives and cost reductions resulting from the Company's initiatives are expected to deliver a significantly better financial result than FY23. The logistics issue, whilst transitory in nature, will increase full-year debt and has highlighted the prudence in undertaking a capital raise. The Company will use the funds from this raise to retire debt and progress the business strategy. We remain focused on growing, processing, and selling almonds as efficiently as possible.'

Summary of the capital raising and outlook

Select Harvests (SHV) has announced a fully underwritten capital raising of approximately $80.0 million to support its growth strategy and enact identified cost reduction initiatives. The company aims to reset the balance sheet with appropriate gearing and provide flexibility to pursue value accretive growth opportunities. The funds raised will be allocated to the repayment of debt, provision of facility headroom, and capital investment to increase processing capacity. With the forecast 2024 crop expected to be in the range of $7.70/kg - $7.75/kg, the company anticipates a significantly better financial result than FY23. Select Harvests remains focused on growing, processing, and selling almonds efficiently, leveraging the favorable market conditions and strategic initiatives to drive future growth.