SEGRO is proposing to raise approximately GBP556 million (net proceeds) by way of a Rights Issue, the issue is fully underwritten.
1 for 5 rights issue of 166,033,133 ordinary shares of 10 pence each in the capital of the Company at a price of 345 pence per New Ordinary Share. The issue price of 345 pence per New Ordinary Share represents a discount of approximately 28.9 per cent. to the closing price (based on the Dividend Adjusted Closing Price) for an Ordinary Share of 485 pence on 9 March 2017 (being the last business day prior to the release of this Announcement) and a 25.3 per cent. discount to the theoretical ex-rights price based on the Dividend Adjusted Closing Price for an Ordinary Share of 485 pence on 9 March 2017.
The net proceeds of the issue will be used:
- to finance the cash consideration of GBP216 million for the acquisition of 50 per cent. of the Airport Property Partnership (“APP”), which on completion was funded from the Group’s internal resources;
- to invest approximately GBP165 million to progress the development projects within the Current Development Pipeline (approximately GBP34 million) and Near-Term Development Projects (approximately GBP131 million), which have been identified since the time of the Group’s GBP325 million placing in September 2016; and
- in relation to the balance of approximately GBP175 million, to fund additional projects associated with the development of the Group’s land bank and/or land held under option.
The Directors have previously stated that their aim is to keep Group leverage below the mid-cycle target loan to value (“LTV”) ratio of 40 per cent. The Directors expect that once the proceeds from the Rights Issue are fully deployed, SEGRO’s LTV ratio will be consistent with this level at approximately 35 per cent. The Directors expect the Acquisition and capital expenditure associated with the Current Development Pipeline and Near-Term Development Projects for which proceeds from the Rights Issue are expected to be used to be accretive on an Adjusted EPS and EPRA NAV basis upon completion and leasing of the expanded development programme and following the adjustment for the New Ordinary Shares issued pursuant to the Rights Issue. Further benefits are expected to be generated on deployment of the remaining proceeds of the Rights Issue on additional development projects. The Rights Issue is to be fully underwritten by BofA Merrill Lynch, UBS Investment Bank, Barclays, BNP PARIBAS and HSBC, to provide certainty as to the amount of capital to be raised.
David Sleath, CEO, the Company said: “The new capital we are seeking to raise will allow us to further progress the implementation of our development and income growth strategy, taking advantage of a very favourable occupier market backdrop. In addition to refinancing the acquisition of the 50 per cent. stake in APP we have announced today, the proceeds will fund further attractive development projects over and above those we funded with the proceeds of the placing in September last year.
Our Heathrow portfolio is one of the jewels in our crown and by acquiring full ownership of the assets within APP we are able to add further scale in this supply-constrained market. We see a number of opportunities to realise further value from this unique portfolio in the short and long term and we look forward to pursuing our development plans, taking advantage of strong occupier demand for facilities around Heathrow from customers needing rapid access both to the airport and to Central London. This puts us in a strong position for the future.”
SGRO : SEGRO using rights issue to fund acquisition and developments