Nicheliving changes IPO after legal claim

Property developer Nicheliving Holdings has substantially revised its plans for a stock market float after striking a deal to give 20 per cent of the company to a Singaporean investor who recently launched a $21.4 million legal claim.

An amended prospectus released yesterday revealed that Jetwin Investments started proceedings in the Supreme Court of Western Australia against four of the special purpose vehicles (SPVs) that own projects managed by Nicheliving.

Jetwin, which has been a long-term investor Nicheliving projects, claimed it was owed $21.4 million by the SPV entities.

Under a negotiated agreement, Jetwin will be issued 30 million shares at a deemed price of 33 cents per share - equating to $9.9 million.

That equates to a 20 per cent shareholding upon completion of Nicheliving’s scaled-down initial public offering (IPO).

In return, Jetwin has agreed to halt the legal claim.

In addition, Jetwin will transfer its equity interest in three SPV entities (which own projects in Canning Vale, Atwell and Willetton) to Nicheliving.

Jetwin has invested $6.95 million in the SPVs but its equity is currently valued at $9.9 million.

Jetwin will also have a nominee on the Nicheliving board.

The agreement is conditional on Nicheliving raising at least $5 million through its IPO.

The updated prospectus discloses that Nicheliving is now seeking to raise $5.7 million at an issue price of 50 cents per share.

That’s a big change from October, when the company issued its original prospectus, showing it was seeking to raise up to $12 million.

Nicheliving currently has 95.2 million shares on issue, with directors Paul Bitdorf and Ronnie Michel-Elhaj each holding about one third.

It plans to issue 11.4 million shares under the IPO, 13.3 million to its lead manager (CPS Capital Group) and corporate adviser (William Buck), and 30 million to Jetwin.

The proceeds from the IPO will be used primarily for debt repayment ($2 million) and to invest in unspecified development projects through equity holdings in SPV entities ($2.1 million).

This marks a shift in Nicheliving’s strategy, as the company has not historically invested in the SPV entities.

The proceeds will also be used for working capital ($510,000), rent payments ($400,000) and directors’ fees ($90,000).

The updated prospectus shows that Nicheliving’s revenue has fallen from $95 million in FY15 to $29 million in FY17, and is forecast to jump to $51 million the current financial year.

The group incurred a $7.6 million loss in FY15 but has since traded in the black, with a net profit of $7.1 million in FY17 and a forecast of $13.6 million this year.

Its original prospectus had forecast a net profit of $10.7 million this year.

Nicheliving manages a portfolio of residential property developments, primarily urban infill, valued at more than $400 million.