This article is from the Australian Property Journal archive
EMBATTLED Becton Property Group will trade its shares, totalling 95.3% in the company, for debts owed to BOS International, Australian Capital Reserve and noteholders — as part of its recapitalisation agreement.
The proposal has the unanimous backing of the directors of Becton in the absence of a superior proposal and subject to an Independent Expert that it is in the best interests of Noteholders and reasonable for investors.
Becton’s CEO Matthew Chun said the proposal will enable Becton to meet near-term debt repayment obligations and facilitate the ongoing support of Becton’s financiers.
The BOS International debt currently comprises a $150.0 million working capital facility secured by a fixed and floating charge over the assets of Becton. BOS International is also owed an additional $6.0 million of deferred obligations.
Under the restructure proposal, $22.0 million of the will be converted into a covenant light, interest capitalising debt tranche maturing on 31 March 2013 and Becton will repay $33.0 million by issuing 33.0 million convertible securities from a subsidiary trust BOSI’s nominee. Each preferred security will have a face value of $1.00 and may be exchanged into Becton stapled securities.
In addition, BOSI will be granted rights to appoint up to two directors to the board.
Whilst the remaining debt will have its term extended to 31 March 2013 with a reduced all-in margin and a financial covenant structure more favourable for Becton.
Becton has also struck a deal with ACR, which is in liquidation, and is being managed by liquidators Gregory Winfield Hall and Ian Robert England of PricewaterhouseCoopers.
ACR is owed $33.3 million due to be repaid in three instalments between July 2011 and July 2013. The debt is related to the acquisition of a portfolio of assets from ACR in connection with the Estate Properties Group transaction undertaken in 2007.
Becton will restructure $38.8 million into approximately 22.4 million units in the 360 Capital Development Fund No. 1 (formerly the Becton Development Fund No.1) currently valued at approximately $0.3 million as well as issue 736.0 million Stapled Securities a price of 2.56 cents per Stapled Security.
In addition ACR was given options for 778.0 million securities exercisable at 2.56 cents at any time.
If the proposal goes ahead, ACR will hold approximately 49.9% of the total stapled securities on issue, or 67.2% if the options are exercised.
Meanwhile Becton noteholders, owed $13.7 million will receive a payment of 2.57 cents per BECG Note and 25.4 stapled securities in Becton for each BECG Note at an issue price of 2.56 cents per Stapled Security.
The deal will see noteholders will hold approximately 36.2% of the total stapled securities on issue.
At the end of the day, existing securityholders will hold 13.9% in the group.
However the extent of any further changes to Becton’s ownership structure will depend on the different stakeholders exercising their preferred securities and options.
If all options are exercised by ACR, BOSI will hold 48.0% of the stapled securities, with ACR holding 35.0%, noteholders holding 12.3% and existing Securityholders holding 4.7%.
The proposal is contrary to media speculation that a great white knight was going to emerge and save the company.
The news was not accepted well by the market, shares traded 28.6% lower at 3 cents last Friday.
Australian Property Journal