Property heavyweight CapitaLand has raised $1.1 billion in gross proceeds from a seven-year unsecured convertible bond (CB) issue, the largest CB transaction for an Asian listed issuer so far this year.
The lead manager of the issue may exercise an option by Aug 29 to increase the size of the issue by up to $100 million, taking the issue to $1.2 billion.
‘The objective of this fund-raising is primarily to extend the group’s debt maturity profile,’ said CapitaLand.
‘Thus, CapitaLand expects to use the net proceeds of the issue mainly to refinance or repay its existing indebtedness (including the repurchase of outstanding medium term notes and/or convertible bonds), and the balance to finance new investments and/or for working capital.’
The bonds are convertible into new CapitaLand ordinary shares at a conversion price of $4.79, which works out to a 20 per cent premium over yesterday’s closing share price of $3.99, and a 21.6 per cent premium over the one-day volume weighted average price of $3.94.
The Singapore dollar-denominated bonds will bear a coupon rate of 2.875 per cent per annum.
The maturity date of the bonds is Sept 3, 2016.
Credit Suisse (Singapore) was the sole bookrunner and lead manager for the issue, which was placed with institutional and sophisticated investors.
The seven-year bond is the longest tenor convertible bond issue this year in Asia. The previous CapitaLand convertible bond issues in 2006, 2007 and 2008 had tenors of 10, 15 and 10 years respectively.
This means that the group now has a significant amount of unusually long-term financing at attractive terms.
‘These long-dated issues provide CapitaLand with one of the longest debt maturity profiles of any real estate company in Asia,’ the group said.
CapitaLand group president and CEO Liew Mun Leong said: ‘This issuance further strengthens the debt profile of the group as we begin the next phase of our growth which we articulated in our H1 2009 results presentation.
‘These plans include the next phases of expansion in China and Vietnam, extension of our leadership in Asian retail malls, building on Ascott’s global dominance and significantly growing our financial services franchise.
‘We will also continue to look for opportunities in our home market, Singapore.’
Yesterday morning, CapitaLand said at its second quarter results briefing that its net debt decreased from $8.2 billion as at end-June 2008 to $5.8 billion as at end-June 2009.
Its net debt to equity ratio has improved from 0.68 to 0.43 over the same period.
CapitaLand management said that an acceptable gearing range in the prevailing environment would be 0.50 to 0.75, which suggests that the group has further debt capacity.
The group had $4.2 billion cash at June 30, 2009, up from $3.4 billion a year ago.
Earlier this year, CapitaLand did a $1.84 billion rights issue. The 1-for-2 issue, priced at $1.30 a share, was a ‘pre-emptive’ move to allow it to better pursue mergers and acquisitions, and investment opportunities that may arise, CapitaLand had said then.
The company also said then that it had a number of proposals on the table that it was studying.
Source : Business Times – 31 Jul 2009
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