West Perth-based agribusiness Great Southern Plantations Ltd has secured approximately $215 million in an agreement with ANZ bank, to fund future growth of the company.
West Perth-based agribusiness Great Southern Plantations Ltd has secured approximately $215 million in an agreement with ANZ bank, to fund future growth of the company.
The full announcement is pasted below
Great Southern Plantations (ASX code: GTP) is pleased to announce the next important step in its ongoing capital management programme with the execution of a Structured Finance Transaction. This initiative was foreshadowed to the market on 16 June 2006. The transaction, led by ANZ Investment Bank and advised on by ANZ Capital Solutions, provides initial funding of approximately $215 million in two tranches. The first tranche of approximately $75m will be drawn by Great Southern and used to purchase a Yield Asset. The second tranche of approximately $140m will be used by Great Southern to fund future growth. The finance is secured over approximately half Great Southern's extensive existing pulpwood land bank.
The finance is repayable in 2012 by which time it is expected that Great Southern's capital requirements will significantly decline with over 20,000 plantable hectares of Great Southern's extensive pulpwood land holdings being available for use on an annual basis. The finance is limited in recourse to select Great Southern Property Trust ("GSPT") assets together with the Yield Asset purchased by GSPT. The Yield Asset is a financial instrument, purchased by GSPT from ANZ that provides quarterly income over its 7 year term for the purpose of paying interest and operating costs. Great Southern is required to maintain a 60% LVR on the total asset value of
GSPT under the transaction.
Key benefits of the Structured Finance Transaction include:
- Great Southern retains ownership and ongoing control of the underlying pulpwood land assets.
- The transaction provides limited recourse debt against certain assets of the land bank, and enables flexibility to secure additional debt to fund future growth.
- The funding does not give rise to interest payments or other ongoing cash servicing obligations for Great Southern as they are serviced by the Yield Asset payments.
- The funding has an all in funding cost of approximately 8% pre-tax.
- The funding enables Great Southern cost efficient access to additional capital pools in the future through the selling down of further interests in the Asset Trust on a needs-be basis or through repeating the transaction using other elements of Great Southern's growing pool of assets.
The successful completion of the structured finance transaction releases capital to fund the continuing growth of Great Southern's products. Great Southern's strong balance sheet, and innovative financing solutions, enables the continuing efficient use of gearing, while remaining conservatively geared when compared to our major competitors. Great Southern anticipates a continuing preference for debt to fund future operational growth.
