hit a all time low of 33c in feb this year??? IMO getb the facts....
China giant backs Goodman's property trust initiative
Florence Chong | August 06, 2009 Article from: The Australian
CHINA'S sovereign wealth fund, China Investment Corporation (CIC), will take up a $500 million preference share placement as Greg Goodman moves to rebuild his industrial property trust, Goodman Group with a $1.8 billion capital raising. Play 12345 Loading…Please login to rate a video.You can't rate an advertisement. (1 vote) Property review The Australian's Turi Condon on the latest moves in the commercial property sector. Sky News Views today: 0 Sorry, this video is no longer available. Bookmark and Share
Goodman, which entered a trading halt yesterday, is expected to inform the market today its $1.3bn one-for-one entitlement issue is fully underwritten and CIC, a $US200bn giant, has taken up the placement.
More crucially, it is expected to announce that its lenders have agreed to extend some $4bn of debt beyond 2012, in what has been described as a "comprehensive capital management solution".
Goodman issued the new securities at 40c each -- a discount of almost 20 per cent to Tuesday's closing price of 49c.
The capital injection would reduce Goodman's gearing, now around 40 per cent, to below 30per cent.
Goodman, Australia's largest industrial property trust and one of the largest owners of industrial property in the world, had been expected to undertake the capital raising for weeks.
With the exception of Westfield, other large listed trusts have completed a second round of raisings this year, tapping investors for almost $10bn. Goodman itself raised $956m in October.
Goodman sought short-term finance of $485m from its former joint-venture partner, Macquarie Group, and CIC when it was faced with debt repayment earlier this year.
It intended to pay back the bridging finance after the capital raising.
Goodman chief executive Greg Goodman was not available for comment yesterday.
However, he said in June that CIC would be a long-term investor. "CIC likes industrial property. They have clearly done a lot of work on the group and we will be working with them in a way which will be complementary to our funds management, development and total business," he said.
In June CIC provided a short-term finance of $200m, which equated to an 8 per cent stake in the group. This will be paid out by Goodman and replaced by the $500m placement.
The Australian understands Macquarie has agreed to parlay part of its $285m into longer term bank debt.
A source close to the deal said some of the capital raised would go towards reducing bank debt in return for extending these facilities beyond 2012. Goodman is due to repay $648m in May, $480m in May 2011 and $847m the following year.
An investment banker pointed out that the underwriters of the latest capital raising -- Macquarie Bank, Royal Bank of Scotland and JPMorgan -- are all lenders to Goodman.
Asked whether existing investors would be peeved by the preference shares issued to CIC, one source close to the deal said: "I don't think existing investors will get upset because the terms will be acceptable to them.
"The relationship with CIC will be very important for generating value for investors over the next five years." The partners are expected to look at a number of avenues for CIC to play a role, including investing in Goodman's funds and in new acquisitions.
A Sydney fund manager said the bigger question was how much of the money raised would go into the underlying funds.
"The group needs $1.8bn. We all know its Australian wholesale unlisted fund and the UK logistics fund are too highly geared and need cash.
"If they raise $1.8bn, that is going to satisfy the balance sheet of the main company, but that is not enough."
Goodman's shares hit an all-time low of 33c in February and began to run up in late May, reaching a high of 61.5c last month, but have since slipped, closing at 49c on Tuesday.
GMG Price at posting:
44.5¢ Sentiment: Hold Disclosure: Held
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