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- Release Date: 27/02/14 11:37
- Summary: GENERAL: ARG: Argosy Restructures Interest Rate Hedging Portfolio
- Price Sensitive: No
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ARG
27/02/2014 09:37
GENERAL
REL: 0937 HRS Argosy Property Limited
GENERAL: ARG: Argosy Restructures Interest Rate Hedging Portfolio
Argosy Property Limited is pleased to advise that it has restructured its
interest rate hedging portfolio. The average duration has been lengthened to
7.0 years from 5.5 years, the weighted average interest rate of the interest
rate swaps portfolio has reduced from 6.03% to 4.67% (excluding swaps
expiring in December this year at 2.89% and 2.94%) and the overall amount of
fixed rate hedging has increased from $283 million to $310 million,
representing 72.5% of current borrowings.
This restructuring will result in extended fixed rate cover at a lower
average interest rate. Argosy has taken this opportunity to bring down the
average fixed rate interest cover at a point where long term rates remain in
the lower quartile and with the Reserve Bank of New Zealand poised to embark
on a series of official cash rate rises. The weighted average fixed interest
rate is now within the range of the Reserve Bank of New Zealand's neutral 90
day rate of 4.50% plus/minus 0.50%.
Argosy will make tax deductible swap close out payments of $11.1 million in
March 2014 and $11.3 million in June 2014 to achieve this restructure. The
company has the balance sheet capacity to make these payments and will remain
within its medium term debt-to-total assets ratio policy of 35-40%, after
both payments have been made.
Savings in interest costs on the previous interest rate hedges will be
considerable. Argosy will achieve annual interest cost savings of at least
$3.7 million per annum through to March 2019, with further savings
thereafter.
The restructure will have no impact on reported earnings for the 2014
financial year. The expected annual dividend for the March 2014 and March
2015 years, as advised in the September Interim Report, remains unchanged at
6 cents per share.
End CA:00247563 For:ARG Type:GENERAL Time:2014-02-27 09:37:57
