Why Is SunRice Backing Its Dividend Reinvestment Plan with $10M Underwriting?
Ricegrowers Limited (SunRice) has reactivated its Dividend Reinvestment Plan for the FY25 final dividend, offering shareholders a discounted share purchase option backed by a $10 million partial underwriting.
- DRP reactivated for FY25 final dividend of 50 cents per B Class share
- Shares issued at 3% discount to 7-day VWAP starting 1 July 2025
- Partial underwriting of up to $10 million by Canaccord Genuity
- Underwriting supported by institutional investors with detailed termination conditions
- DRP participation optional for eligible Australian B Class shareholders
Dividend Reinvestment Plan Reactivation
Ricegrowers Limited, trading as SunRice, has announced the reactivation of its Dividend Reinvestment Plan (DRP) for the fiscal year 2025 final dividend. Eligible B Class shareholders will have the opportunity to reinvest their dividends at a 3% discount to the volume weighted average price (VWAP) of shares over a seven-business-day period starting 1 July 2025. The final dividend is set at 50 cents per B Class share, payable on 21 July 2025.
Strategic Capital Management and Underwriting
The DRP's reactivation aligns with SunRice's broader capital management strategy aimed at enhancing shareholder value while preserving cash for growth initiatives. To support this, the company has secured a partial underwriting agreement with Canaccord Genuity (Australia) Limited, backed by sophisticated institutional investors, for up to $10 million. This underwriting ensures that any shortfall in DRP participation will be covered, providing financial stability and flexibility for SunRice.
Underwriting Agreement and Risk Controls
The underwriting agreement includes comprehensive termination clauses protecting both parties against adverse events such as trading suspensions, insolvency, significant market downturns, and changes in key management personnel. These provisions underscore the cautious approach taken by SunRice and Canaccord to mitigate risks associated with the DRP issuance and market volatility.
Participation Details and Shareholder Impact
Participation in the DRP is optional and limited to Australian-resident B Class shareholders as of the dividend record date, 2 July 2025. Shareholders wishing to participate or modify their election must do so by 5pm on 3 July 2025. The discounted share issuance offers a cost-effective way for shareholders to increase their holdings, potentially compounding returns while supporting the company’s expansion plans.
Looking Ahead
SunRice will continue to review the DRP annually, balancing shareholder interests with operational needs. The partial underwriting arrangement provides a buffer against uncertain uptake, but the actual shareholder participation rate will be a key factor in determining the plan’s success and its impact on the company’s capital structure.
Bottom Line?
SunRice’s partial underwriting of its DRP signals confidence in shareholder support while preserving cash for growth, but market conditions and shareholder uptake remain pivotal.
Questions in the middle?
- What level of shareholder participation will SunRice see in the FY25 DRP?
- How might the partial underwriting influence SunRice’s capital allocation and expansion plans?
- Could adverse market or corporate events trigger termination of the underwriting agreement?
