Might explain the volumeRefinancing positions Australand for...

Might explain the volume

Refinancing positions Australand for takeoverNatalie Craig
April 16, 2009 - 10:54AM
Australand could be primed for takeover after the residential and commercial property developer announced this morning that its lenders had approved refinancing, allowing it to pay off a $563 million loan facility due on June 30.

Linwar Securities last week speculated that successful refinancing of the $350 million owing on the facility could be the catalyst for Singapore's CapitaLand to attempt a takeover, or at least boost its 59% stake.

CapitaLand, South-East Asia's largest listed property group, has denied it has plans to privatise the group, but analysts have pointed out that Australand is trading at a massive discount to its book value and that CapitaLand has amassed a war chest of $S6 billion ($5.7 billion) after a capital raising late last month.

Australand is one of Australia's biggest residential developers, specialising in house and land packages in Melbourne, and apartments in Sydney.

The refinancing announcement sent Australand shares up as much as 25 per cent in early trading. Shares were up 6 cents, or 18% at 39 cents. CapitaLand stock also rose, up 1.7%.

Australand managing director Bob Johnston told investors at the group's annual general meeting that it had more than $560 million in existing undrawn facilities and cash on March 31 and it had "commitments'' to renew $100 million of the existing $150 million of unsecured facilities expiring in 2009. Negotiations on the remaining $50 million facility were "well under way''.

He said the debt covenants of all businesses in the sector were being "closely examined'' and that its covenants "were met throughout 2008 and continue to be met''.

Australand said it had also agreed on new lending rules for its $950 million multi-option facility, including a reduction in the interest cover ratio from 2.5 times to 2 times and a cut to the gearing covenant from 60% to 55%.

xplain the volume