Friday 29th June 2018
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WEL Networks, the Central North Island lines company and fibre network operator, wants to raise up to $150 million selling five-year bonds that will list on the NZX, which it will use to repay bank debt.
The community-owned Hamilton-based company is selling $125 million of five-year unsecured, subordinated fixed-rate bonds with scope to accept a further $25 million of oversubscriptions, it said in documents lodged with the NZX. The rate will be set in a bookbuild on July 9, building in an unspecified margin above the five-year swap rate, recently at 2.53 percent. WEL operates electricity lines through Waikato, and holds 85 percent of fibre network firm Ultrafast Fibre.
"Following a sustained period of investment in constructing Ultrafast Fibre’s fibre network, the WEL board believes that now is an appropriate time to strengthen and diversify WEL’s balance sheet by issuing a subordinated bond," chair Rob Campbell said in a letter to investors. "The proceeds of the Offer are expected to be used to repay a portion of WEL’s existing bank debt."
WEL subsidiary Waikato Network bought the government's majority shareholding in Ultrafast Fibre for $189 million in 2016, giving WEL and its strategic partner Waipa Networks 100 percent ownership of the central North Island's fibre company. It was previously jointly held with Crown Fibre Holdings.
The network company's earnings before interest, tax, depreciation and amortisation were $81 million in the year ended March 31 on revenue of $176 million. Debt was $478.3 million including shareholder loans from Waipa Networks.
The offer's joint lead managers are Forsyth Barr, Deutsche Craigs, First NZ Capital and ANZ Bank New Zealand, with Commonwealth Bank of Australia's New Zealand branch a co-manager. There's no public pool or underwrite.
The offer will open on July 10 and close on July 27, with trading expected on Aug. 3.
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