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CitySpring Rights Issue Announcement 14 Aug 2009
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nickyng
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17-Aug-2009 12:35
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wondering any retail joes will be interested to buy this stock for it's Right issue call ???? :P wonder what happ after XR ? hee...48cts rights...hmm.... |
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katak88
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16-Aug-2009 20:32
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Business Times - 15 Aug 2009
CitySpring in $235m rights issue Cash call to pay down debt and position company for new investments and possible acquisitions By CONRAD TAN CITYSPRING Infrastructure Trust said yesterday that it is raising $235.2 million through a rights issue to reduce its bank debt, readying it for new investments and potential acquisitions. Fai Au Yeung, chief executive of CitySpring's trustee-manager, said that the capital raised from unit-holders will give it greater flexibility to grow by investing more in existing assets or buying new assets. CitySpring said that it expects to save $4.7 million a year from the debt reduction, which will also free up its ability to borrow more in future. Existing unit-holders are being offered one new unit for every unit they hold, or 489.97 million units in total, at 48 cents each - a 38.5 per cent discount to the closing price of 78 cents on Thursday. CitySpring's unit price ended 3.8 per cent lower at 75 cents yesterday. 'The cash call is no surprise and we view it positively,' OCBC Bank analyst Meenal Kumar said in a report. Paying down debt 'clears part of the overhang' created in 2007 when CitySpring bought Basslink, an undersea electricity transmission cable in Australia, for A$1.177 billion ($1.42 billion) in a deal financed purely by debt, Ms Kumar said. 'The trust can now shift out of neutral gear and seriously consider growing its asset base over the next 12 to 18 months,' she added. Temasek Holdings, which owns the trustee-manager and is CitySpring's largest unit-holder with a 27.77 per cent stake, has agreed to subscribe to at least 27.77 per cent, and up to 32.01 per cent, of the rights issue, through a sub-underwriting agreement. That means Temasek's stake in CitySpring could rise to as much as 29.9 per cent at the end of the offer, if it is allocated rights units that other unit-holders do not buy. That would still be below the 30 per cent shareholding threshold at which Temasek would be forced to make a general offer to buy out the rest of CitySpring's unit-holders, under Singapore Exchange rules. Temasek's backing for CitySpring's cash call is reminiscent of its support for DBS Group's own $4 billion rights issue last December. At the time, Temasek, DBS's biggest shareholder with a 27.6 per cent stake, agreed to subscribe for up to a third of the DBS rights shares. DBS and UBS are managing the CitySpring rights issue and have fully underwritten the offer. The rights issue is renounceable, which means unit-holders who choose not to invest more money in CitySpring by subscribing for the rights units can sell the rights on the market, though that would mean their own stake in the trust would be diluted. The estimated net proceeds of $227.5 million will be used to repay part of a $370 million loan that CitySpring took out with DBS last year. Mr Fai said that CitySpring is negotiating with DBS to replace that term loan with a more flexible revolving credit facility that can be tapped repeatedly for up to $370 million when needed, even after part of the loan is repaid. CitySpring has received in-principle approval for the revolving loan, which will have a term of at least two years, although the details have yet to be finalised, he added. On Tuesday, CitySpring said its cash earnings - which it uses to gauge its performance as a business trust - fell 22 per cent to $13.9 million for the three months to end-June from a year earlier, as revenue slid 17 per cent to $82.8 million. Mr Fai said that CitySpring is 'always looking' for possible acquisitions but has not found a good deal since its Basslink acquisition. 'Right now there are a lot of potential deals, but nothing which is attractive from a valuation perspective,' he said. 'Our primary region is Asia-Pacific. We're not going to look for things that are particularly exotic or not well-regulated.' CitySpring will consider acquisitions outside Asia-Pacific, but only if the reasons are 'compelling', he said. 'Anything in Singapore, we are going to be particularly interested in. But there's nothing I can see on the horizon at the moment.' Asked what types of assets CitySpring would be interested in, he said: 'I don't think we would stray too far from traditional definitions of infrastructure. We're not going to do mobile operators or airlines. It would be very traditional classes of infrastructure assets.' |
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