Goodman brighter for $485m packageCarolyn Cummins Commercial...

Goodman brighter for $485m packageCarolyn Cummins Commercial Property Editor
June 17, 2009
GOODMAN GROUP has secured its long-term future in striking a $485 million deal with the Chinese Government and Macquarie Bank in exchange for a substantial stake of its shares.

However, the market is expecting that in order to wipe out all its debts Goodman will still undertake a $1 billion capital raising within the next six weeks.

Goodman refused to comment on such a move but said in a statement to the ASX that further refinancing initiatives were being planned.

News of the much-anticipated option-and-cash financing deal did little to appease investors who sold down the price by 7.5c to 41.5c. In the past two weeks Goodman's price has jumped almost 100 per cent to reach a high of 49.5c on very strong turnover.

Expectations of the future capital raising will ensure another bumpy few weeks of trade as investors get on the register to participate in any rights issue.

Following the refinancing, including any equity dilutions and exercise of options, the China Investment Corp will emerge with 8 to 10 per cent of Goodman,

with an eventual target of up to 19.9 per cent. Macquarie will hold about 11 per cent.

Under the initial deal with CIC, it will commit to $200 million in cash as well as share in an issue of 255.3 million options with Macquarie at 40c per option.

As part of the deal, Macquarie has also sold down $15 million to CIC out of its original $300 million commitment announced on May 19. Under that arrangement,

414 million options were granted to Macquarie with an exercise price of 30c in connection with its pledge of providing $300 million.

Yesterday's deal replaces the one granted to Macquarie and splits the new financing between it and CIC. The two have agreed to a pro rata allocation of the options, based on their loan exposures. As a result, Macquarie ends up with 393.3 million options with an average exercise price of 33.8c and CIC with 276 million at the same price.

Brokers said the deal would eliminate Goodman's debt, of which about $1.5 billion is due by 2012, and give it scope to expand its logistics and funds management into China.

Greg Goodman, the group's chief executive said it was "putting the right building blocks in place".

"The sovereign wealth from CIC will give the group long-term stability and also means we will only have to recapitalise in one go, rather than keep going to the banks and market," he said.

"The deal is a significant reorganisation of our capital structure and gives us exposure to the vast Chinese economy."