07/05/2009 - 10:33

Bunnings trust to raise $120m

07/05/2009 - 10:33

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Perth-based Bunnings Warehouse Property Trust has unveiled plans to raise $120 million, which will be backed by Wesfarmers and fully underwritten by JP Morgan Australia.

Bunnings trust to raise $120m

Perth-based Bunnings Warehouse Property Trust has unveiled plans to raise $120 million, which is backed by Wesfarmers and fully underwritten by JP Morgan Australia.

In a statement, Bunnings said it will raise the amount through a non-renounceable one for 3.87 entitlement offer with each share priced at a discounted $1.50.

Shares in Bunning's Warehouse Property Trust (BWP) last traded at $1.745 before being placed in a trading halt.

The raising will take place in two components, with $55 million to be raised through institutions and $65 million to be offered through the retail module.

Wesfarmers has already indicated it will take up all of its entitlement through its 22.7 per cent shareholding in BWP, amounting to around $27.2 million.

"Proceeds [from the raising] will be used to repay debt, terminate excess interest rate derivatives and enhance BWP's financial flexibility to take advantage of future offers.

Currently, BWP has $380 million in debt facilities of which around $342 million is drawn.

Following the completion of the raising, BWP said its available debt capacity will increase to $150 million on a pro-forma basis while its pro-forma gearing will be reduced from 35.5 per cent to 23.8 per cent.

"Today's equity raising forms an important part of BWP's capital management strategy," said Grant Gernhoefer, general manager of Bunnings Property Management, which manages BWP.

"It provides short term financial flexibility to manage debt funding and better positions the Trust over the medium term to pursue its prudent growth strategy of selective, earnings accretive acquisitions, and value-adding developments.

"Following the equity raising, BWP will be one of the lowest geared property trusts in the S&P/ASX 200 A-REIT index, with pro-forma gearing reduced to 23.8 per cent."

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