Port Bouvard is set to receive a much needed lifeline from Queensland's FKP Property Group, which has agreed to chip in nearly $23 million to a planned $60.2 million capital raising.
Port Bouvard is set to receive a much needed lifeline from Queensland's FKP Property Group, which has agreed to chip in nearly $23 million to a planned $60.2 million capital raising.
The announcement comes some seven months after Port Bouvard entered into a trading halt to renegotiate bank debt facilities.
Port Bouvard today said the ASX-listed FKP will subscribe to 175 million new shares at 13 cents apiece to raise $22.75 million.
The private placement will enable FKP to expand its footprint in the Western Australian property market, and emerge with 29.47 per cent shareholding in Port Bouvard on completion of the entire capital raising.
The raising also includes a one for one rights issue to raise $17 million and a share placement to institutional and sophisticated investors to raise $20.45 million.
Shares in the rights issue and placement are priced at 13 cents each. Shares in Port Bouvard last traded at 25c in late October.
Macquarie Capital Advisers and Euroz Securities will act as joint lead manager to the raising.
The capital raising is subject to approvals from shareholders and the Foreign Investment Review Board.
The capital raising meets a requirement by lender St George which, as part of the renegotiated bank facilities, imposed on Port Bouvard to raise no less than $50 million before July 15 this year.
As part of the renegotiations, $20 million of the funds raised must be used to repay debt.
Port Bouvard late last year refinanced its existing bank facilities with St George to the tune of $167.6 million, renewed until the end of 2011.
Port Bouvard today said the repayment of debt under the St George agreement will reduce the company's gearing ratio - net debt to total assets - from 50.7 per cent to 26.7 per cent.
Part of the funds will also be used to undertake construction of the initial infrastructure and utility services at the company's flagship asset, Point Grey.
"We appreciate the patience of our shareholders while we have focussed our attention on recapitalising the Company to strengthen its balance sheet and provide sufficient funding to develop our flagship asset Point Grey," Port Bouvard chairman Lee Verios said.
"We are excited at the prospect of partnering with an experienced and national property developer such as FKP and look forward to welcoming two new Directors to our board.
"This recapitalisation will significantly strengthen the balance sheet and together with the extension of the Company's banking facilities will enable the Company to focus on future growth opportunities and delivering maximum value to shareholders."
In addition, Port Bouvard will cancel its option over the Gidgegannup property.
In 2007, the company entered into three separate put and call option agreements, with the first option exercised later that year. That exercise delivered the first tranche of rural residential land to Port Bouvard.
The two remaining options required Port Bouvard to pay $30 million in August and a further $15 million to $24 million in 2011 to acquire the remaining Gidgegunnup townsites.
"The Board has now determined that the exercise price of the options is significantly above the current market value of the remaining townsite lots which were the subject of the Option Agreements," Port Bouvard said.
"This deterioration had previously resulted in a write-down of the value of the original Gidgegannup land acquired from its cost of $36 million to $4.85 million as at 31 December 2009."
Port Bouvard's interest in the Gidgegannup property will revert to the vendor, Riseley Investments.
A staggered break fee of $9.9 million is payable.
