Announcement re: Convertible Bond Offering

RNS Number : 4746J

Derwent London PLC

17 July 2013

 



17 July 2013                                                    

NOT FOR DISTRIBUTION IN OR TO THE U.S., CANADA, AUSTRALIA, JAPAN, SOUTH AFRICA OR IN ANY OTHER JURISDICTION IN WHICH SUCH DISTRIBUTION WOULD BE PROHIBITED BY APPLICABLE LAW

Derwent London plc Convertible Bond Offering

Derwent London plc (the "Group", the "Company" or "Derwent London") today announces the launch of an offering of £150m of Convertible Bonds due 2019 (the "Bonds").

The Bond offering forms part of a wider financial strategy to lower debt costs, extend maturities and provide an appropriate mix of secured and unsecured debt for the Group taking advantage of current favourable market conditions.  Derwent London's strategic aim is to move towards a target for unencumbered assets representing at least 50% of the total property portfolio over the next 12 months. The Company intends to use the net proceeds of the offering to refinance property acquisitions totalling approximately £93m made in the last 12 months, to help fund its significant development pipeline and to increase resources for future acquisition opportunities.

Derwent London has a committed capital expenditure programme of around £400m and is currently on site at projects totalling in excess of 400,000 sq ft (37,200m²).  Over the next 12 months the Group will start construction of a further 345,500 sq ft (32,050m²).  Following the expected completion of the sale of 1-5 Grosvenor Place SW1, Derwent London will still have 2.5 million sq ft (232,000m²) of space that could potentially be delivered by 2020.

The Group intends to announce its interim results for the six month period ended 30 June 2013 on 15 August 2013.  Our performance is anticipated to be in line with the Group's expectations.

The Bonds are expected to be issued by Derwent London Capital No. 2 (Jersey) Limited, a wholly-owned subsidiary of the Company incorporated in Jersey, and will be guaranteed by the Company.   The Bonds will be senior and unsecured obligations of the Company and will be subject to a negative pledge.

The Bonds will be issued at par and are expected to carry a coupon of between 1.25% and 1.75% per annum payable semi-annually in arrear and will, subject to certain conditions, be convertible into fully paid Ordinary Shares of the Company (the "Shares").  The initial conversion price is expected to be set at a premium of between 30% and 35% above the volume weighted average price of the Shares from launch to pricing on 17 July 2013.

Settlement is expected to take place on or about 24 July 2013 (the "Settlement Date").  If not previously converted or redeemed, the Bonds will be redeemed at par on 24 July 2019.  The Company will have the option to call all outstanding Bonds on or after the date falling 15 days after the Interest Payment Date falling in July 2016 at par plus accrued interest if the value of the Ordinary Shares underlying a Bond equals or exceeds 130% of the conversion price for at least 20 out of 30 consecutive dealing days or, at any time, if 15% or less of the principal amount of the Bonds remains outstanding.  

It is intended that an application will be made for the Bonds to be listed on the Official List and admitted to trading on the Professional Securities Market of the London Stock Exchange prior to the first interest payment date (expected to be 24 January 2014).

Barclays Bank PLC and The Royal Bank of Scotland plc are acting as Joint Global Coordinators and Joint Bookrunners and HSBC Bank plc, J.P. Morgan Securities plc and UBS Limited are acting as Joint Bookrunners for the offering.  Rothschild is acting as financial adviser to Derwent London for the offering.

For further information, please contact:

Derwent London	John Burns, Chief Executive Officer
Tel: [phone]	Damian Wisniewski, Finance Director

About Derwent London plc

Derwent London plc owns a portfolio of commercial real estate predominantly in central London valued at £2.9bn as at 31 December 2012, making us the largest London-focused real estate investment trust (REIT).

Our experienced team has a proven record of value creation through development, refurbishment and asset management activities. We take a fresh approach to each building, adopting a design-led and tenant-led philosophy. We focus on buildings with reversionary mid-market rents, particularly those in improving locations around the West End and the City borders.

The business is grounded on a strong balance sheet with modest leverage, a robust income stream and flexible financing. Landmark schemes in our portfolio of 5.4 million sq ft (505,800m²) as at 31 December 2012 include Angel Building EC1, Buckley Building EC1, Qube W1, Horseferry House SW1 and Tea Building E1.

In 2013 to date Derwent London has won the 'West End Deal of the Year' for our letting to Burberry at 1 Page Street SW1 and 'City Development of the Year' for our 4 & 10 Pentonville Road N1 scheme at the OAS Development Awards as well as 'Developer of the Year' at the New Energy & Cleantech Awards.

Derwent London came seventh overall in the 2012 Management Today awards for 'Britain's Most Admired Companies', topping the real estate sector for the third year in a row.  Earlier in 2012 the Group won the Estates Gazette 'Property Company of the Year - Offices' award.  Last year the Tea Building also won a RIBA regional award and an AJ Retrofit award for the 'Green Tea' refurbishment to improve the environmental performance of the building. 

For further information see www.derwentlondon.com or follow us on Twitter at @derwentlondon.

This announcement does not constitute or form part of an offer to sell or the solicitation of an offer to subscribe for or otherwise acquire any securities in the United States or in any other jurisdiction. This announcement is not for distribution, directly or indirectly in or into the United States (as defined in Regulation S under the US Securities Act of 1933, as amended (the "Securities Act")). The securities referred to herein have not been and will not be registered under the Securities Act and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.

DISCLAIMER

This communication is directed only at persons who (i) are outside the United Kingdom or (ii) have professional experience in matters relating to investments falling within Article 19(5) of The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (iii) are persons falling within Article 49 2(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). This communication must not be read, acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this communication relates is available only to relevant persons and will be engaged in only with relevant persons.

The Joint Bookrunners are acting on behalf of the issuer and the Company and no one else in connection with the Bonds and will not be responsible to any other person for providing the protections afforded to clients of the Joint Bookrunners or for providing advice in relation to the Bonds.

N M Rothschild & Sons Limited ("Rothschild"), which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting for the Company and no one else in relation to the Bond offering and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Rothschild nor for providing advice in relation to the Bond offering.

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 the Joint Bookrunners or by Rothschild or by any of their respective directors, officers, employees or agents as to or in relation to the accuracy or completeness of this announcement or of any written or oral information made available to any interested party or its advisers and any liability therefor is hereby expressly disclaimed.

Stabilisation/FCA

THE ROYAL BANK OF SCOTLAND PLC IS ACTING AS STABILISING MANAGER. IN CONNECTION WITH THE ISSUE OF THE BONDS THE STABILISING MANAGER OR ANY PERSON ACTING ON BEHALF OF THE STABILISING MANAGER MAY OVER-ALLOT BONDS OR EFFECT TRANSACTIONS WITH A VIEW TO SUPPORTING THE MARKET PRICE OF THE BONDS AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL. HOWEVER, THERE IS NO ASSURANCE THAT THE STABILISING MANAGER (OR ANY PERSONS ACTING ON BEHALF OF THE STABILISING MANAGER) WILL UNDERTAKE STABILISATION ACTION. ANY STABILISATION ACTION MAY BEGIN ON OR AFTER THE DATE ON WHICH PUBLIC DISCLOSURE OF THE FINAL TERMS OF THE OFFER OF THE BONDS IS MADE AND, IF BEGUN, MAY BE ENDED AT ANY TIME, BUT IT MUST END NO LATER THAN THE EARLIER OF 30 DAYS AFTER THE ISSUE DATE OF THE BONDS AND 60 DAYS AFTER THE DATE OF THE ALLOTMENT OF THE BONDS.

 

END

 

 

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