A2 scotches $200 million rumour

Last updated 11:08 28/11/2012

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Listed Kiwi milk firm A2 says rumours that it is about to embark on a massive capital-raising project are wrong.

The company's shares were placed in a trading halt this morning after a New Zealand Herald article suggested it would try to raise $200 million by riding on the coat-tails of dairy giant Fonterra.

That figure would represent half its entire market capitalisation of $399m.

A2's spokesman John Draper said the trading halt would be lifted shortly, and the speculation was incorrect.

"Companies don't go and raise that sort of size money unless they've got a distinct project in mind."

He said A2 had a capital-light model of rolling out their IP in partnership with big established players in markets.

"It doesn't need huge swags of capital to do that."

The company was continuing its discussions to shift from the NZX's alternative board to the main board, as signalled at the AGM a week ago.

"Nothing's changed in that regard," said Draper.

He suggested the speculation might have risen out of the excitement around Fonterra's share fund, with trading due to start this Friday.

A2 markets milk containing only the A2-type of beta-casein, while standard milk contains the A1 type.

Research is so far inconclusive on the health benefits of the milk, but many consumers believe in its qualities.

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- BusinessDay.co.nz

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