This article is from the Australian Property Journal archive
FKP Property Group has emerged as the white knight to save debt distress Perth developer Port Bouvard.
FKP Property Group, which was on a similar boat last year before Stockland came to the rescue, will invest approximately $23 million in Port Bouvard through a subscription agreement for a placement of 175 million shares at $0.13 per share.
The issue price of $0.13 per new share represents a 42% discount to the company’s proforma net tangible assets per share post completion of the capital raising.
The placement to FKP is to be undertaken as part of a proposed capital raising by Port Bouvard, to raise $60.2 million of new equity. FKP is expected to hold 29.47% in Port Bouvard Limited post completion of the capital raising.
Since October last year, Port Bouvard has been negotiating with lenders and selling off assets to reduce its debt facilities.
Port Bouvard said the capital raising will enable the company to satisfy its immediate repayment obligations under its renegotiated financing facilities as well as reduce external borrowings with the gearing ratio (net debt to total assets) reducing from 50.7% at December 2009 to approximately 26.7%.
In particular, the revised terms of the St George banking facilities require the company to raise a minimum $50 million pursuant to the capital raising by no later than July 15 2010, of which at least $30 million is to be underwritten by June 30 2010. St George requires Port Bouvard Limited to use $20 million of the funds raised to permanently reduce its debt by July 15 2010.
The capital raising will also give it sufficient funds to undertake construction of the initial infrastructure and utility services along with the development of the first stage of residential lots at the company’s flagship asset, Point Grey.
“We appreciate the patience of our shareholders while we have focussed our attention on recapitalising the Company to strengthen its balance sheet and provide sufficient funding to develop our flagship asset Point Grey. We are excited at the prospect of partnering with an experienced and national property developer such as FKP and look forward to welcoming two new Directors to our board,” Port Bouvard chairman Lee Verios said.
FKP CEO Peter Brown said the investment was in line with the FKP strategy of pursuing further opportunities in the residential sector.
“We also want to extend our footprint into the strong WA property market and replicate the successes that we have had in the other Australian states,” he added.
Brown said the transaction is not expected to have a material impact on FKP earnings per share in 2010 or 2011. FKP reaffirms its guidance given in February of a full year operating NPAT of $105 million to $110 million.
FKP’s investment will require approval by the Foreign Investment Review Board as well as Port Bouvard’s shareholders.
In the meantime, Port Bouvard shares will remain in a voluntary suspension, since October 30 2009.
Meanwhile Port Bouvard has cancelled three separate put and call option agreements in respect to englobo land in Gidgegannup, which it entered into in July 2007.
If exercised, the company was required pay $30 million in August 2010 and between $15 million and $24 million in August 2011.
Australian Property Journal
