CapitaLand will be injecting A$281.6 million (approximately $333.1 million) into its Australian unit by absorbing its full entitlement in Australand’s rights issue worth A$475 million.
Australand, which is based in Sydney, Australia, posted a A$268.8 million net loss for H1 2009 yesterday. It, however, says that the proceeds from the rights issue will strengthen the firm’s balance sheet amidst a tough H2. This is the second time that Australand filed for rights issue in a year.
Australand noted that the exercise will “provide additional headroom against the covenant limits of Australand’s debt facilities, sufficient liquidity to meet all anticipated funding requirements over the next two years and (to) take advantage of selective opportunities in a disciplined manner.”
To hit the A$475 million target, A$95 million of which is from the retail tranche and A$380 million is from the institutional tranche. CapitaLand’s Australian unit intends to make a 7-for-10 non-renounceable pro-rata entitlement offer for new stapled sureties at A$0.40 each. The offer price is a 20 percent discount to the last closing price of A$0.50 on July 24.
CapitaLand, a 59.7 percent stakeholder in Australand, will absorb its full entitlement for A$281.6 million cash. The company does not expect the rights issue or its subscription to materially impact its earnings per share or net tangible assets per share for the year ending 31 December 2009.
“The current weak environment in Australia is largely the result of uncertainties in global financial markets,” CapitaLand said. The company also thinks that a “strategic business unit” will gain from the future economic growth in Australia.
UBS Australia and JP Morgan Australia have fully underwritten the rest of the rights issue. The proceeds have lessened Australand’s pro forma gearing from 39.8 percent to 27.6 percent in June 30.
Australand has raised A$461 million through rights issue in September last year. In that activity, CapitaLand also absorbed its full entitlement.
Yesterday, Australand declared the latest fund-raising with its fiscal results. The company suffered net loss of A$286.8 million attributable to stapled security holders for the half-year ending June 30, turning the net income of A$25.6 million last year.
This was followed by a 29 percent yearly fall of A$311.3 million in revenue from continuing operations. These was caused by unfulfilled losses from property reassessments totalling to A$235.3 million, and joint venture inventories and impairments to development of A$93.5 million after tax, which Australand has warned about a week ago.
Australand has downgraded its performance guidance, believing that the rest of the year would be challenging. The company expects its full year operating income after tax – omitting impairments and impact of the rights issue, and unrealised revaluations losses or gains – to be 35 percent lower compared a year ago, not 30 percent as formerly reckoned.
For the half-year ending June 30, Australand will yield an interim distribution amounting to A$0.03 per stapled security. For the year ending 31 December 2009, a final distribution of A$0.02 per stapled security could also be implemented.
Yesterday, CapitaLand parts lost three cents to close at $3.94. After the two-day training stop at the company’s request, trading in Australand’s share will take up tomorrow.