possible capital raise???, page-45

Article from: The Australian

AUSTRALIA'S largest listed industrial trust, Goodman Group, has been placed on negative "credit watch" by international credit agency Standard & Poor's.

S&P had already downgraded Goodman from its A rating to BBB status earlier this year .

S&P credit analyst Craig Parker said the agency took the action for two reasons.

Firstly, he said Goodman sought a "Band-Aid" solution in a deal with Macquarie last week, when a $460million debt fell due.

It was the first of four tranches of a $1.9billion facility matured last week.

"They did not roll the debt over with a long-dated facility," Mr Parker said.

"We had hoped that they would put in place a new debt facility."

Instead, Goodman signed a $300million facility underpinned by Macquarie to repay all of its 2009 debt expiries.

Macquarie would receive options over 414 million Goodman shares at the price of 30c a unit.

Mr Parker said the second reason was the response from the share market had continued to depress its unit price, making it difficult for Goodman to embark on a successful capital raising.

He said Goodman had missed the window to raise equity.

This month, the GPT Group and Stockland raised $3.7billion in capital raisings.

The rating agency would review Goodman's rating within 90 days to determine whether it should be downgraded again.

Each downgrade would add to the cost of debt.

Goodman has said that it is considering further strategic investments on similar terms to the Macquarie investment.

In a research note last week, JPMorgan said Goodman was likely to be seeking about $200million of additional funding and, if committed, the investor would receive 69 million options.

The firm said that if all the options were converted, they would represent 19.9 per cent of Goodman's shares on issue.

Investors' reaction to the Macquarie deal had been negative, saying that Goodman had offered its units too cheaply to these strategic investors.

Investors said the move had diluted their shareholding in the company.

Goodman units closed 2.5c higher at 24.5c each.