Equity Raising

RNS Number : 6251U

Sirius Real Estate Limited

04 December 2013

 



THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES OR TO US PERSONS, AUSTRALIA, CANADA OR JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION OR DISTRIBUTION IS UNLAWFUL.

Sirius Real Estate Limited

("Sirius" or the "Company" or the "Group")

Refinancing and €40 million Equity Raising

Sirius is pleased to announce that it is raising €40 million via a placing and subscription (the "Equity Raising") through the issue of 166,666,667 new ordinary shares at 24 cents per share having agreed in principle the conclusion of its refinancing arrangements.

Use of proceeds

The Company intends to use most of the net proceeds of the Equity Raising to reduce the Group's financial leverage and to restructure certain debt facilities as a priority. The Company has agreed in principle terms with a syndicate of two banks led by Berlin Hannoversche Hypothekenbank AG ('BerlinHyp') and another well respected German bank for a new five year banking facility of €115.0 million subject to their final Board approval and documentation and has agreed in principle terms with Macquarie Bank Limited, London Branch ("Macquarie") for a new facility of a minimum of €32.5 million, both of which will be utilised to assist with the refinancing of the Company's existing facilities with BerlinHyp and ABN Amro, a part of the Royal Bank of Scotland ("RBS").

The reduction of loan facilities will include unencumbering two assets which are planned for disposal orrefinancing next year. When completed, the net proceeds of these disposals or refinancings along with the balance of the Equity Raising and the proposed sale of one further unencumbered asset and a land package will be used to allow the Company to accelerate its capital expenditure programme to take advantage of earning enhancing opportunities within the current portfolio and to seek attractive new acquisition opportunities.

Subject to completion of the Equity Raising and final documentation, it is anticipated the above facilities will be completed shortly and the Company will make an announcement to confirm once the arrangements are fully in place.

Restructuring of the BerlinHyp facility

The Company's largest loan facility with BerlinHyp stood at €149.4 million at 30 September 2013 and was secured on 14 properties. The Company has agreed in principle to replace this in part with a new facility from the BerlinHyp led syndicate of €115.0 million, secured against nine of these properties.  The proposed new facility will expire in December 2018, have an interest rate with a margin of three per cent. over Euribor and amortise at a rate of two per cent. per annum.

The Company has agreed heads of terms with Macquarie to provide a new minimum €32.5 million facility as follows: an expiry in January 2017, at a floating interest rate of six per cent. margin over Euribor  and amortising at a rate of one per cent. per annum (the "Macquarie facility"). The Macquarie Facility is subject to Macquarie's internal credit approval and final documentation. If the Company enters into the Macquarie Facility, €10.5 million may be utilised to refinance three of the five remaining properties currently in the BerlinHyp portfolio. 

€26.2 million of the proceeds of the Equity Raising, will be used to pay down the non-refinanced balance of the BerlinHyp facility, including associated costs, leaving the two unencumbered assets which are intended for sale or refinancing next year, as mentioned.

Restructuring of the RBS facility

The Company's other facility that is currently being refinanced is the outstanding €31.1 million loan with RBS, which was due for repayment at the end of November 2013 and is currently secured on six properties and one land package. RBS has agreed not to charge any additional fees for late payment up to 20 December 2013 so that the Company may utilise the balance of the potential Macquarie Facility, being a minimum of €22.0 million to refinance five of the properties which will reduce the RBS loan to a maximum of €9.1 million. This will be repaid by using funds from the Equity Raising however the amount required could be further reduced by €2.1million through a part disposal of one ofthe assets. The land package and one small property will be left unencumbered, the latter having been notarised for sale in early 2014 with net proceeds of approximately €300k.

Outlook

Following these refinancings and the expected disposals or refinancing of the non-core assets, the Company will have 27 properties valued at €414.8 million as at 30 September 2013, one of which will be unencumbered (valued at approximately €3.0 million), and one unencumbered land package (valued at approximately €1.8 million).

The Group will have three debt facilities of €226.5 million, in aggregate, expiring between January 2017 and August 2023. As a result, the weighted average expiry of the Group's bank facilities and outstanding secured bonds will increase to 5.4 years along with reducing the Group's loan to value to 56% (excluding cash resources). 

The non-core asset disposals are expected to generate approximately €15 million which includes a disposal of land in Dusseldorf for €4.2 million which completed on 29 November 2013. In addition, the Group expects to have at least approximately €2.5 million available after utilising the proceeds of the Equity Raising to pay down the BerlinHyp and RBS facilities and associated costs.

The balance of funds from the Equity Raising and the proceeds of sale of the Dusseldorf land and the non-core asset disposals will be used to fund the Company's accretive capital expenditure programme which is expected to significantly increase income and capital returns on those assets, as well as allow Sirius to pursue selected attractive acquisition opportunities.

The Company's interim results for the six months to 30 September 2013, which were also announced today, contain full details of the Company's trading for the period and current outlook including the Company's intention to restart the payment of dividends.  

Details of the Equity Raising

The Equity Raising is to be conducted through the issue of 166,666,667 ordinary shares of no par value in the Company ("New Shares") representing 47.5 per cent. of the Company's current issued share capital (excluding treasury shares) to new and existing shareholders. These shares are to be issued at a price of 24 cents per share (the "Issue Price"), representing a discount of 4.00 per cent. to the prevailing share price, to new and existing shareholders. Application has been made for the New Shares to be admitted to the London Stock Exchange ("Admission") and will rank pari passu in all respects with existing issued shares of the Company including the right to receive all dividends and other distributions declared after Admission.

143,441,492 of these New Shares (the "Placing Shares") have been conditionally placed by Peel Hunt (the "Placing") and the balance of 23,225,175 New Shares (the "Subscription Shares") have been conditionally subscribed for pursuant to subscription agreements madedirectly with the Company (the "Subscription").

The issue of the Placing Shares is conditional, inter alia, upon Admission of the Placing Shares becoming effective and on the placing agreement between the Company and Peel Hunt (the "Placing Agreement") becoming unconditional and not being terminated prior to Admission.

The issue of the Subscription Shares is conditional, inter alia, upon Admission of the Subscription Shares.

Material elements of the refinancing arrangements were only recently agreed in principle requiring that the Equity Raising be undertaken in a short time frame as the proceeds are required to effect certain elements of the refinancing. The New Shares are not being offered to Shareholders on a pre-emptive basis because the Board has concluded that it is not in the best interests of the Company to make such a pre-emptive offer due to the time and cost involved and the necessity to complete the fund raising process in a short time frame.

Karoo Investment Fund SCA SICAV-SIF, 24.46% shareholder in the Company, has agreed to subscribe for 127,501,137 New Shares in the Placing making its shareholding 24.57% following Admission. The Directors, excluding Wessel Hamman, a non-executive director of the Company, having consulted Peel Hunt, consider the participation in the Placing by the Karoo Investment Fund to be fair and reasonable as far as shareholders are concerned. Robert Sinclair, Chairman of the Company, James Peggie, a non-executive director of the Company, Andrew Coombs, CEO of Sirius Facilities and Alistair Marks, CFO of Sirius Facilities have each agreed to subscribe 333,333, 281,250, 270,000 and 62,500 New Shares respectively. Andrew Coombs and Alistair Marks are also being issued 500,000 shares each from Treasury, pursuant to the terms of the Company's LTIP, conditional on completion of the refinancing of the BerlinHyp facility.

It is expected that Admission of the New Shares will become effective and that dealings will commence in the New Shares by 8.00 a.m. on 9 December 2013. Following completion of the Equity Raising the Company will have an issued share capital of 525,419,038 shares, of which 6,518,731 are held in Treasury. Therefore the total number of shares with voting rights in the Company will be 518,900,307.

CEO of Sirius Facilities, Andrew Coombs, said,

"We are very pleased to be announcing this refinancing and fundraising, which will represent the most significant and final step in the Company's refinancing and significantly strengthens and secures the Company's financial position. The Company is now well placed to focus on delivering increased value to our shareholders. This refinancing finally allows us to focus solely on growing the profitability of the business, by developing both our existing estate and the earnings enhancing opportunities that lie within it, as well as potential attractive opportunities elsewhere."

Contacts:

Sirius	[phone]
Andrew Coombs, CEO Sirius Facilities
Alistair Marks, CFO Sirius Facilities
Peel Hunt	[phone]
Corporate Finance: Capel Irwin / Hugh Preston
Corporate Broking: Andy Crossley / Jock Maxwell Macdonald
Novella Communications	[phone]
Tim Robertson
Ben Heath

Peel Hunt LLP ("Peel Hunt") which is authorised and regulated in the United Kingdom by the FCA, is acting solely for the Company in relation to the Equity Raising and no one else and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Peel Hunt nor for providing advice in relation to the Equity Raising or any other matter referred to in this announcement.

This announcement and the information contained herein is restricted and is not for release, publication or distribution, in whole or in part, directly or indirectly, in or into the United States or to US Persons, Australia, Canada or Japan or any jurisdiction into which the publication or distribution would be unlawful.

Peel Hunt is not acting or advising the Company or any other persons in respect of the Subscription.

This announcement is for information purposes only and does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any New Shares in the United States or to US Persons (as such term is defined in the US Securities Act 1933, as amended (the "Securities Act"), Australia, Canada, South Africa or Japan or any jurisdiction in which such offer or solicitation would be unlawful. Any failure to comply with these restrictions may constitute a violation of the securities laws of such jurisdictions. The New Shares have not been and will not be registered under the Securities Act and may not be offered, sold or transferred, directly or indirectly, within the United States or to US Persons unless registered under the Securities Act except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the securities laws of any state or other jurisdiction of the United States. No public offering of the New Shares referred to in this announcement is being made in the United States, Australia, Canada, South Africa or Japan or any jurisdiction in which such public offering would be unlawful. No public offering of shares referred to in this announcement is being made in the United States, the United Kingdom or elsewhere.

The information in this press release may not be forwarded or distributed to any other person and may not be reproduced in any manner whatsoever. Any forwarding, distribution, reproduction, or disclosure of this information in whole or in part is unauthorised. Failure to comply with this directive may result in a violation of the Securities Act or the applicable laws of other jurisdictions.

This announcement includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will", or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include matters that are not historical facts. They appear in a number of places throughout this announcement and include statements regarding the current intentions, beliefs or expectations of the directors ("Directors") of the Company concerning, among other things, the Company's results of operations, financial condition, liquidity, prospects, growth, strategies and the Company's markets. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual results and developments could differ materially from those expressed or implied by the forward-looking statements. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements in this announcement are based on certain factors and assumptions, including the Directors' current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company's operations, results of operations, growth strategy and liquidity. Whilst the Directors consider these assumptions to be reasonable based upon information currently available, they may prove to be incorrect. Save as required by law or by the Listing Rules, Prospectus Rules and the Disclosure and Transparency Rules, the Company undertakes no obligation to publicly release the results of any revisions to any forward-looking statements in this announcement that may occur due to any change in the Directors' expectations or to reflect events or circumstances after the date of this announcement.

This announcement has been issued by and is the sole responsibility of the Company. No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by Investec or Peel Hunt or by any of their affiliates or agents as to, or in relation to, the accuracy or completeness of this announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed. Neither Peel Hunt nor any of their affiliates or agents shall have any obligation to update this announcement or any additional information or to correct any inaccuracies in it which may become apparent.

The contents of this announcement are not to be construed as legal, financial or tax advice. If necessary, each recipient of this announcement should consult his, her or its own authorised legal adviser, financial adviser or tax adviser for legal, financial or tax advice. Each placee or subscriber should consult with its own advisers as to legal, tax, business and related aspects of an acquisition of Placing Shares or Subscription Shares, as the case may be.  This announcement contains no recommendation or guidance as to whether the acquisition of Placing Shares or Subscription Shares is appropriate to the particular objectives, financial situation or particular needs of any place or subscriber.

This announcement is directed only at: (a) persons in member states of the European Economic Area who are 'Qualified Investors' within the meaning of article 2(1)(e) of the Prospectus Directive (which means Directive 2003/71/EC and includes any relevant implementing measure in any member state); (b) persons in the United Kingdom, who (i) have professional experience in matters relating to investments falling within article 19(5) ("Investment professionals") of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"); (ii) are persons falling within article 49(2)(a) to (d) ("High net worth companies, unincorporated associations, etc") of the Order; or (iii) are persons to whom it may otherwise be lawfully communicated; (c) persons in in South Africa who fall within the categories of persons set out in section 96(1)(a) of the Companies Act, 2008, including (i) persons whose ordinary business, or part of whose ordinary business, is to deal in securities; (ii) persons who are regulated by the South African Reserve Bank; (iii) financial services providers licensed under the Financial Advisory and Intermediary Services Act, 2002; or (iv) financial institutions as defined in the Financial Services Board Act, 1990  (all such persons in (a) (b), (c) and (d) together being referred to as "Relevant Persons"). This announcement must not be acted on or relied on by persons who are not Relevant Persons

 

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