trading halt ... another cnp, page-2

Reuters

Shares in conglomerate Wesfarmers Ltd were placed on trading halt after a report that it was planning a multi-billion dollar capital raising.

Wesfarmers was planning to raise equity capital to refinance used to fund the purchase last year of retailer Coles Group Ltd for $18 billion ($US17 billion) after a deterioration in credit markets, The Australian Financial Review said.

Wesfarmers has around $3.3 billion to refinance by October.

Wesfarmers said it requested the trading halt pending its response to media speculation about an equity raising. A company spokesman was not available for further comment.

Wesfarmers sold a less-than-expected US$650 million of bonds in the U.S. earlier this month, at a higher cost and including protection measures for investors, market sources told Reuters .

"An equity raising has always been a possibility but a multi billion dollar raising would be more than we expected and would significantly reduce refinancing risk on the company's $3.3 billion debt maturing by October," Deutsche Bank credit analyst Colin Tan said in note to clients.

Wesfarmers also has about $2.5 billion in short-term maturities, he added.

Investment banks including Credit Suisse, GoldmanSachsJBWere, ABN AMRO and Macquarie Group were thought to be lining up as underwriters, the paper said.

The turmoil in global credit market has pushed up the cost of funds, making it difficult for companies to raise debt.

Wesfarmers was initially expected to sell a eurobond in April but plans were postponed after the company decided to review its refinancing options, several market sources said.

"I think to raise $3 billion in equity is an awful lot. I could see $2 billion and a $1 billion eurobond," said a banker who asked not to be identified.

Shares in several Australian companies with high gearing levels, such as Allco Finance Group Ltd, ABC Learning Centres Ltd and Centro Properties Group Ltd , have been hammered as they struggled to roll over maturing debt.