Metlifecare is issuing more shares to raise $70 million to go towards reducing its debt and funding building developments.
This latest round of capital raising follows a large dilution of shares last year when the company took over two of its rivals.
Metlifecare says it wants to strengthen its balance sheet after its merger with rivals Vision Senior Living and Private Life Care Holdings last year.
The listed company is raising $70 million through a placement to institutional investors, after which it will offer a Share Purchase Plan to eligible shareholders.
The merger boosted Metlifecare's half year profit in December, after the company ended the last financial year $132 million in the red.
The company says it is on track to exceed its cash flow target of nearly $61 million for the 2013 full year.
Metlifecare says the money raised will substantially eliminate its non-development debt, and the company has also sold two assets for $38 million to reduce debt.
The money will also go towards helping the company reach its goal of developing at least 200 new units and beds a year by 2015.
The retirement village operator is also looking at a dual listing on the Australian stock exchange to enlarge its shareholder base.
If the company's major shareholder, Retirement Villages New Zealand, chooses not to participate in the capital raising, it will reduce its shareholding from about 43% to about a 39% stake.
Hamilton Hinden Greene director and client adviser James Smalley says Metlifecare's stock has performed strongly along with the other two listed companies in the same sector, Summerset and Ryman Health.
He says it's not unusual for a company with a strong share price to try to take advantage of that by raising more equity.
Mr Smalley says Ryman and Summerset have offered a full continuum of care, providing independent units which are attached to a rest home and care beds.
He says Metlifecare has had a different business model and has tended to focus on the units.
"But the success of Ryman and Summerset I think does show you that what the market wants is that full continuum of care."
Mr Smalley believes Metlifecare will want to increase its number of care beds and provide working capital, because that's what the market wants.
