The company told the ASX it was a"pre-emptive and decisive"step that would strengthen its balance sheet and position it for the future. Reece will also"temporarily"suspend dividend payments to shareholders.
The money to be raised includes a fully underwritten $232 million accelerated pro rata non-renounceable entitlement offer,a fully underwritten $368 million institutional placement and a non-underwritten share purchase plan.
The Wilson family,Reece's biggest shareholder group,said it would subscribe for $170 million of shares. On completion the aggregate holding of the Wilson family shareholding will reduce from 73.3 per cent to 67.7 per cent.
We think we're being prudent,we think we've sized this right.
Peter Wilson,Reece chief executive
The equity raising will be conducted at a price of $7.60 per new share,equal to a 12.5 per cent discount to the last traded price of $8.69 on Friday for Reece.
The company said the funds would be used to support the business during the period of global economic uncertainty,increase liquidity and reduce net debt. The measures would increase the company's total liquidity position to $917 million,Mr Wilson said on an investor and analyst call.
"We think we're being prudent,we think we've sized this right. We've done a lot of modelling on this,the good,the bad and the ugly,the worst-case scenario,"Mr Wilson said.