Hellabys will redeem $50 million of capital notes six months before they are due to mature, to take advantage of lower interest rates available through its core bank debt.
The diversified group’s June 15, 2011, notes pay an annual coupon of 8.5% a year. The company will use provisions of its trust deed to repay the notes in full on Dec. 15, it said in a statement today. It first sold the notes in 2006.
The early redemption announcement comes after Hellaby raised$28.4 million in a 3-for-7 rights issue at a 30% discount this month, which the company said at the time gave it the flexibility to strengthen its balance sheet while contemplating acquisitions.
“Whilst we are currently in a position to lower the company’s overall interest cost through our banking facilities, our debt gearing levels still give us the capacity to fund future growth opportunities,” chief financial officer Richard Jolly.
The shares rose 2.1% to $1.96 today, having been sold in the rights issue at $1.30 apiece. The notes were last quoted on the NZX Debt Market at a yield of 7.5%.