Precinct to raise up to $75M in bond offer to repay bank debt

Friday 28th November 2014

Precinct Properties New Zealand, which this week sold its SAP building in Auckland to property mogul Bob Jones for $97 million, plans to raise up to $75 million in a bond offer, which it will use to repay bank debt.

The Auckland based company is selling $50 million of seven year bonds with oversubscriptions of up to $25 million, it said in a statement. The interest rate will be set in a bookbuild on Dec. 12, with an indicative margin range of between 1.3 percent and 1.45 percent per annum.

"The proceeds of the bond offer (net of issue costs) will be used to repay bank debt," chairman Craig Stobo said in the offer document. "The board believes this will strengthen Precinct’s overall capital structure by diversifying funding sources and extending the average term of its borrowings."

Precinct has been divesting non-core assets while expanding its Auckland holdings, including entering into a development agreement for a commercial office at the new Wynyard Quarter. Auckland vacancy in city office buildings is at a 20 year low, as New Zealand’s biggest city has benefited from strong population growth, translating to rental demand for businesses.

The real estate investor had bank loans, accrued interest, US private placement notes, and senior bond debt totalling $578.8 million as at June 30.

The offer, which doesn't have a public pool, opens on Dec. 8 and closes on Dec. 12.

ANZ, Deutsche Craigs and First NZ Capital are joint lead managers of the offer, with Macquarie Capital as co-manager.

The shares rose 0.9 percent to $1.115, and have gained 12 percent this year.

BusinessDesk.co.nz

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