This article is from the Australian Property Journal archive
MACQUARIE DDR Trust is seeking to raise $198.9 million to recapitalise the group after exhausting all strategies to reduce debt.
MDT has been in a trading halt since March this year after the trust revealed that its lender has refused to extend its debt facility. Last Friday, it resumed trading and shares closed 1 cent lower at 6 cents.
Last Friday, MDT announced a pro-rata renounceable entitlement offer of 10 new units for every 3 existing units at an offer price of $A0.055 per new unit. The recapitalisation will introduce a new cornerstone investor, EPN GP LLC through a $A9.5 million private placement at a price of $A0.067 per unit. EGN has also bought a 2.6% stake in the trust and Macquarie Group’s 50% interest in Macquarie DDR Management LLC.
EPN has committed to take up its entitlement and, together with certain other institutional and wholesale MDT unitholders, will participate in sub-underwriting of the entitlement offer up to $A156.4 million.
MDT’s CEO Luke Petherbridge said the offer will enable the trust to recapitalise and stabilise its balance sheet and enable it to take advantage of any recovery in the US retail property market.
“With the introduction of our new cornerstone investor, EPN, and the property expertise of DDR, we see an opportunity to enhance occupancy and future cash flows in the portfolio, with the objective of improving value as markets continue to recover,” he added.
Funds raised will be used to repay all unsecured debt facilities and unsecured derivative contracts, totalling $US107.2 million; reduce the revolver debt facility by $US55.0 million to $US207.9 million; pay costs of the equity raising and other liabilities; and provide additional funds for near-term working capital requirements.
As a result, the trust’s revolver debt facility will be extended by three years to April 2013 and its balance sheet gearing from 73.2% to 64.4%.
The entitlement offer is fully underwritten by joint lead managers Citigroup Global Markets Australia Pty Limited and Macquarie Capital Advisers Limited. Standstill agreements from the Trust’s lenders and derivative counterparties are in place.
Australian Property Journal
