Wellington, March 20 NZPA - Shares in Nuplex Industries dropped sharply when the company came out of a four-day trading halt and said it had dropped plans for a placement of shares.

Having closed at $1.07 last Friday, Nuplex shares fell to as low as 35c today, having been as high as $7.81 in October 2007. Around noon the shares were down 57c, or 53 percent, to 50c.

The resins and chemical maker said today that it was considering raising $132.8 million of new equity capital through a pro-rata renounceable rights issue of new shares to existing Nuplex shareholders.

The rights issue would be fully underwritten by First NZ Capital Securities and had received sub-underwriting support from a broad range of institutional and habitual investors, Nuplex said.

Under the rights issue, shareholders would be offered seven new shares for every one existing share, at an issue price of 23c a share.

It was planned to open the rights issue on April 2 and close it on April 20. It was conditional on Overseas Investment Office approval.

Net proceeds from the planned capital raising would be used to reduce amounts outstanding under Nuplex's senior debt facility.

On Monday, the company said it was planning to raise $110m of new capital to reduce debt under an agreement with its banks.

The funds were to be raised through a placement of new ordinary shares to institutional and habitual investors, and a pro-rata renounceable rights issue of new ordinary shares to existing Nuplex shareholders.

The New Zealand Herald today said it understood the share placement had failed to gain enough support from institutions.

Initially a trading halt on Nuplex shares put in place on Monday was to last until the close of trading on Tuesday, but on Wednesday morning it was extended to the close of trading yesterday.

Nuplex said today that its businesses had continued to trade profitably and to be well-positioned in their respective global markets.

The company said its near-term prospects would continue to be influenced by global economic conditions.

Its directors believed the long-term prospects for Nuplex were sound and a rights issue was an "attractive" opportunity to buy further shares.

The directors considered the rights issue to be necessary to ensure Nuplex complied with amended terms of its bank debt facilities, the company said.

Along with the $132.8m from the rights issue, Nuplex may also raise up to a further $22.8m if underwriter First NZ Capital Securities exercised a call option.

For a period of five days following the allotment of shares under the rights issue, First NZ may call for Nuplex to issue to habitual and institutional investors who provided sub-underwriting commitments up to 15 percent of the shares then on issue at 23c a share.

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