This article is from the Australian Property Journal archive
BECTON and a number of its managed funds are unsustainable and the future now rests in the hands of noteholders.
Becton’s board yesterday approved a proposal to its convertible noteholders to amend the term+s of issue of the notes.
Becton chairman William Conn said has urged noteholders to extend the maturity date of the notes, worth $13 million, from June 30 2010 to June 30 2012.
Under the extension proposal, trading on the Australian Securities Exchange as BECG, Becton will pay an interest rate of 9.5% per annum and give noteholders an option to convert four unsecured notes for one stapled security in Becton.
Conn said noteholders’ approval of this proposal is an important step toward a permanent capital management solution and is vital to both the preservation of noteholder value and Becton’s future.
He added that Becton needs more time to sell and develop assets, which is hard right now because credit markets remain tight.
“The recapitalisation process is taking longer than anticipated due to continued difficulties in commercial property markets, tighter credit market conditions and the need to balance the interests of all key stakeholders, including the Becton Group’s secured and unsecured debt providers.
“Attracting debt to fund the Becton Group’s development projects and the assets in the funds is likely to remain difficult unless the Becton Group’s capital structure can be substantially improved and specifically its proportion of debt to equity substantially reduced,” he added.
“Since the onset of the global financial crisis, the Becton Group and its managed funds have repaid more than $900 million in debt and have refinanced or extended a further $956 million of debt. Despite these efforts, the capital structure of the Becton Group and a number of its managed funds remains unsustainable,” Conn continued.
Conn admitted that if noteholders do not approve the extension, Becton’s refinancing and recapitalisation plans are unlikely to succeed.
“In these circumstances, there is a risk that Becton may not be able to continue as a going concern…
“Under these circumstances, noteholders will incur significant losses. If the resolutions are passed, the Becton’s prospects of refinancing and recapitalisation will be considerably stronger, as will the prospects of preserving noteholder value,” he concluded.
Australian Property Journal
