27/03/2009 - 10:10

Peet plans $81.5m rights issue

27/03/2009 - 10:10

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Property developer Peet plans to raise $81.5 million through a rights issue, with around two-thirds of the raising underwritten by company directors and UBS.

Peet plans $81.5m rights issue

Property developer Peet plans to raise $81.5 million through a rights issue, with around two-thirds of the raising underwritten by company directors and UBS.

Chief executive officer Brendan Gore said the equity raising will allow the company to reduce net debt and be on the hunt for "attractive" market opportunities in the medium-term.

Under the issue, shareholders can subscribe for three new shares at a discounted $1.10 each for every share they hold.

Shares in Peet last traded at $1.32 before a trading halt was placed.

In a statement, Peet said the institutional component represents some $64.4 million with around $10.5 million of that to be subscribed to by Peet directors and a party related to chairman Tony Lennon.

The insitutional component is underwritten by UBS.

**UPDATE**

In a statement late this afternoon, Peet said it has successfully completed the $64.4 million institutional component of the rights issue, including the $10.5 million committed to by Peet Directors and related parties.

Peet said the retail component of the offer will open on April 6 and is scheduled to close at the end of that month.

 

 

 

 

 

The announcement is below:

 

 

Peet Limited ("Peet" or the "Company") today announced the launch of an equity raising to strengthen the balance sheet and position the Company for future growth.

Peet Managing Director and Chief Executive Officer, Brendan Gore, said the equity raising would reduce net debt and, in conjunction with other capital management initiatives, allow Peet to participate in attractive market opportunities that were likely to materialise over the medium term.

"A strengthened capital position will also allow Peet to reconsider the development program of projects that have been deferred due to our current focus on capital management," he said.

"Peet has a strong track record of being ahead of the cycle and we are demonstrating that again by moving to strengthen our balance sheet in preparedness for future growth opportunities."

The equity raising launched today is to raise up to $81.5 million through a 1-for-3 accelerated non-renounceable pro-rata entitlement offer ("Entitlement Offer"), at an offer price of $1.10 per share. The institutional component of the Entitlement Offer, representing approximately $64.4 million, is underwritten by UBS AG, Australia Branch except in relation to the participation by Directors and related parties. The Directors and related parties have committed to take approximately 9.5 million shares or approximately $10.5 million of the Entitlement Offer.

Following the Entitlement Offer, Peet's pro forma gearing ratio as at 31 December 2008 will reduce from 45% to approximately 33%3. The Company's core debt facility of approximately $235 million does not mature until December 2010.

Peet Limited Chairman, Tony Lennon, said he was pleased that the offer would be open to retail as well as institutional investors.

"Peet has a very loyal investor base who have taken up funds and syndicate opportunities over many decades and, more recently, investment opportunities in Peet Limited itself," he said. "And we look forward to adding to that committed group of investors through this Offer."

"Peet has a long tradition of conservative and responsible capital management and already has in place a sound capital management program based on a well-articulated strategy to continue:

- to sell a range of product to our core markets (first and second home buyers), particularly in the active Victorian market, generating strong organic cash flow;

- our land syndication business, with the launch of a new syndicate later this calendar year; and

- our program of non-core asset sales.

"This capital raising will provide greater financial flexibility at a time of increased opportunity arising from current market conditions. Peet is positioning itself to take advantage of conditions that favour businesses with strong balance sheets," he said. "We are keen to ensure we are ready to act when it is prudent - and in the best interests of our shareholders - to do so."

Mr Gore said the capital raising followed a period of consolidation and strengthening within the Company that had included bolstering the executive and senior management team, and the recruitment of a number of very experienced and talented operational staff.

"Our half year results to 31 December 2008 showed that the business is performing well in challenging conditions and benefiting from increased activity across the first and second home buyer markets - Peet's core markets."

With the launch of the Entitlement Offer, the Directors of the Company have suspended the Dividend Reinvestment Plan in respect of the interim dividend. All shareholders on the register on the dividend record date of 30 March 2009 will receive a $0.03 per share fully franked dividend in cash. The new shares issued under the Entitlement Offer will not participate in this dividend, however rank pari passu for all future dividends.

ENTITLEMENT OFFER

Peet has commenced an accelerated non-renounceable pro-rata entitlement offer, at an offer price of $1.10 per share. The Entitlement Offer will be conducted on the basis of 1 new Peet ordinary share ("New Shares") for every 3 existing Peet ordinary shares ("Shares") held ("Entitlement") at 4.00pm AWST on Wednesday, 1 April 2009 ("Record Date")4.

The offer price of $1.10 per New Share represents a 16.7% per cent discount to the closing price of Shares on 26 March 20095.

The Entitlement Offer comprises an institutional component ("Institutional Entitlement Offer") of approximately $64.4 million and an offer to eligible retail shareholders to participate at the same price ("Retail Entitlement Offer"). UBS has been appointed Sole Lead Manager and Bookrunner to the Entitlement Offer and has underwritten the Institutional Entitlement Offer except in relation to the participation by Directors and related parties. The Retail Entitlement Offer is not underwritten.

For the Institutional Entitlement Offer, New Shares equal in number to those not taken up by Peet's eligible institutional shareholders and those which would otherwise have been offered to ineligible institutional shareholders will be offered for subscription to eligible institutional shareholders and selected institutional investors at the offer price of $1.10 per New Share. Peet expects to announce the outcome of the Institutional Entitlement Offer to the market prior to the start of trading on 30 March 2009, with trading expected to resume at commencement of trading on ASX on that date.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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