Capital & Counties Properties is looking to raise £250m through the issue of exchangeable bonds due in 2026.
The bonds, which are expected to carry a coupon of between 1.5% and 2% per annum that is to be paid semi-annually in arrears of equal instalments, will be exchangeable for shares in Shaftesbury, or if Capco decides, a cash alternative amount or a combination of both.
The initial exchange price will likely be set at a premium of between 35% and 40% to the average price of a Capco share over the course of trading on 19 November.
The Shaftesbury shares pledged will represent around a third of Capco’s 25.2% stake in Shaftesbury.
Capco said it planned to use the proceeds from this fund raising to reduce its borrowings on its revolving credit facility for Covent Garden and general corporate purposes.
The firm added the bonds offer would provide it with “additional financial flexibility and liquidity”, and keep its cost of debt low.
If the offer is successful, Capco said it would have around £890m of cash and undrawn facilities. It also expects net debt to total gross assets would continue to be circa 25% and the LTV for Covent Garden would be reduced from 36% at the end of June to 24%. Capco’s net debt stands at £721m.
The new bonds will be admitted to trading on the open market of the Frankfurt Stock Exchange after settlement, anticipated around 30 November.
Capco has also said it may increase the size of the bond offering by a up to £25m.
BNP Paribas, HSBC and UBS are acting as joint global co-ordinators and joint bookrunners.
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