Wellard and Fulida began their 50-50 joint venture last year under the business name Wellao, with plans to build a cattle feedlot and abattoir to meet the rising demand for Australian beef in China. Wellard said it would use $2.8 million of the funds from the raising to buy out Fulida, who will also act as one of the share placement underwriters, thereby maintaining and possibly lifting its 16.58 per cent stake in the company. 

Other significant shareholders backing the sale include Black Crane, Tradeinvest and the Heytesbury Cattle Company who are all jointly underwriting the deal.

Heytesbury Cattle Company runs 160,000 cattle, in total and owns six stations spanning 2.5 million hectares across the Northern Territory and eastern Kimberley region of WA. Among these is the famed Victoria River Downs, which was established in 1883.

The $6 million placement is priced at 24¢; a $19.7 million, fully-underwritten, non-renounceable, one-for-four rights issue priced at 18.5¢ and a $26.3 million convertible note issue.

Wellard chief executive Mauro Balzarini said the fundraising would replenish working capital and enable the company to focus on taking advantage of any changes to the commercial trading environment in live cattle exports.

“Following a prolonged period of very difficult trading conditions with reduced margins and cash flow, we needed to bolster the company’s working capital position to enable the company to negotiate better trading conditions, and strengthen the balance sheet, as well as improving our overall liquidity,” Balzarini said.

“Demand from traditional markets has eased due to higher price pressure, Wellard believes volumes can return to historic levels with price reductions in Australia,” he said.

“As we expect an improvement in cattle supply over time, we need to be ready to capitalise on our competitive advantages in the marketplace if and when this eventuates.”