Published July 28, 2009

CapitaLand answers A$281.6m cash call

Australand posts first-half loss, to raise A$475m from rights issue

By EMILYN YAP

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(SINGAPORE) CapitaLand will inject A$281.6 million (S$333.1 million) into Australand by taking up its full entitlement in the Australian property unit's A$475 million rights issue.

Sydney-based Australand - which yesterday posted a first-half net loss of A$268.8 million - says the proceeds will strengthen its balance sheet amid a challenging second half. It is the company's second rights issue in about a year.

The exercise will 'provide additional headroom against the covenant limits of Australand's debt facilities, sufficient liquidity to meet all anticipated funding requirements over the next two years and (to) take advantage of selective opportunities in a disciplined manner', Australand said.

To raise A$475 million - comprising A$380 million from an institutional tranche and A$95 million from a retail tranche - Australand is making a seven-for-10 non-renounceable pro-rata entitlement offer of new stapled securities at A$0.40 apiece. The offer price is a 20 per cent discount to the last closing price of A$0.50 on July 24.

CapitaLand, which has a 59.27 per cent stake in Australand, will take up its full entitlement for A$281.6 million cash. It does not expect its subscription or the rights issue to materially affect its net tangible assets per share or earnings per share for the financial year ending Dec 31. Its effective interest in Australand should stay the same.

'The current weak environment in Australia is largely the result of uncertainties in global financial markets,' CapitaLand said. It believes Australand - a 'strategic business unit' - will benefit from Australia's future economic growth.

The rest of the rights issue is fully underwritten by JP Morgan Australia and UBS Australia. The proceeds would have lowered Australand's pro forma gearing at June 30 from 39.8 per cent to 27.6 per cent.

In September last year, Australand raised A$461 million through a rights issue. CapitaLand also took up its full entitlement in that exercise.

Australand announced the latest fund-raising with its financial results yesterday. For the half-year ended June 30, the company incurred a net loss attributable to stapled security holders of A$268.8 million - reversing a net gain of A$25.6 million a year ago.

This followed a 29 per cent year-on-year fall in revenue from continuing operations to A$311.3 million. Results were hurt by unrealised losses from property revaluations amounting to A$235.3 million, and impairments to development and joint venture inventories of A$93.5 million after tax, which Australand warned about last week.

Australand expects the rest of the year to be challenging and has downgraded its performance guidance. It expects its full-year operating profit after tax - excluding unrealised revaluations gains or losses, impairments and the impact of the rights issue - to be 35 per cent lower than last year, not 30 per cent as previously thought.

It will pay an interim distribution of A$0.03 per stapled security for the half-year ended June 30. There could also be a final distribution of A$0.02 per stapled security for the year ending Dec 31.

CapitaLand shares lost three cents yesterday to close at $3.94. Trading in Australand's shares will resume tomorrow, after a two-day trading halt at the company's request.