Florence Chong
The Australian
Australia’s oldest listed property trust, GPT Group, is poised to raise $1.7 billion after completing the $1.4 billion institutional component of the capital raising yesterday, and revealing that the $300 million retail offer was fully underwritten.
Sources told The Australian yesterday that a consortium of institutions, not satisfied with their allocations, had underwritten the retail offer.
The institutional component, which was underwritten by UBS, will raise about $1.4 billion, comprising $120 million from a placement and about $1.3 billion for an institutional entitlement offer.
The retail entitlement offer, consisting 830 million new units, priced at 35c each, will open next Monday and close on May 21.
GPT securities remain in a trading halt at 47.5c.
The new units will rank equally with existing units and are expected to start trading on May 27.
Existing investors, including its two largest investors, Stockland and Singapore’s GIC, took up their entitlements.
“GPT now has liquidity to fully fund all commitments through to December 31, 2010, including about $2.4 billion of debt maturities during this period,” said GPT chief executive Michael Cameron.
Mr Cameron said the distribution reinvestment plan had been suspended.
With the capital injection, major credit rating agencies had placed GPT on positive review.
“If GPT does receive a ratings upgrade, the previously announced increased cost of debt would be reversed, representing a positive impact on earnings and distributions,” Mr Cameron said.
The trust said its borrowing cost would increase by $20million after it was downgraded by Moody’s Investors Service in April. GPT raised $1.6billion in October.
A fund manager yesterday described the raising as “an extremely blunt capital management tool”, while an analyst said it could have sought “less value dilutionary alternatives” before the equity raising. After the latest raising, GPT has $2.8billion in available liquidity.
GPT is trying to fast-track its exit from a joint venture with Babcock&Brown International.
GPT formed the joint venture in 2005 with the unlisted Babcock&Brown International, which is mainly focused on German apartments.
“We’re now in position where we can explore opportunities to have an accelerated exit from the Babcock&Brown joint venture,” Mr Cameron said.
He said GPT was working on the assumption that the value of the joint venture would be zero.
http://www.theaustralian.news.com.au/business/story/0,28124,25464910-25658,00.html