Thursday 16th November 2017
|Text too small?|
Christchurch City Holdings Ltd (CCHL), the investment arm of the city council, plans to sell as much as $150 million of five-year bonds, using the money to pay special dividends that will contribute to the city's infrastructure investment.
It marks the first 'retail' bond offered by the investment company which oversees eight businesses for the council including Christchurch International Airport, Orion New Zealand, Lyttelton Port Co, and Red Bus. Group assets are about $3.6 billion.
The bonds will mature on Dec. 6, 2022. The interest rate will be determined during a bookbuild. The offer opens on Nov. 27 and closes on Nov. 29. They are expected to be quoted on the NZDX market on Dec. 7. They are expected to be rated A+ by Standard & Poor's.
In 2016, the council signed off on a "capital release programme" that will see the holding company return a total of $280 million over two years to support post-earthquake infrastructure investment. It paid a $70 million special dividend in 2017. To make the payments, CCHL established a debt funding programme.
Of the new bond, $140 million would be paid to the council in the 2018 financial year, with any balance used to refinance CCHL's short-term debt, it said.
"Since June 2013, except for debt securities issued under its existing capital markets programme, CCHL has sourced all of its term borrowing requirements from the council, which, to fund this, has in turn borrowed from the Local Government Funding Agency," it said. "Although CCHL expects this source of funding to remain available for the foreseeable future, CCHL considers it prudent to diversify its available sources of funding by issuing debt in its own name to complement its borrowing from the council."
CCHL's total group borrowings stood at $1.3 billion, according to its 2017 annual report. Of that, bonds and floating-rate notes made up $266 million, short- and long-term loans from the council were about $480 million and loans with external parties amounted to $429 million.
CCHL has appointed Westpac Banking Corp as arranger and joint lead manager with ANZ Bank New Zealand. There is no public pool for the offer.
No comments yet
Serko first-half profit drops 16% as R&D, expansion costs mount
A2 Milk says strong growth continued in first 4 months of FY19
Argosy expects to find more damage at NZ Post House
Steel & Tube, ComCom appeal record mesh fine
Fletcher Building shares drop on weaker earnings forecast
November 20th Morning Report
NZ dollar slips as US-China trade tensions persist
Spark sets 5G launch date, but without any 5G spectrum
MARKET CLOSE: NZ shares dip as trade war fears linger
NZ dollar still firm against USD but gains capped by waning risk appetite