Listed trust Picton Property Income has announced proposals to issue up to £22m new zero-dividend preference shares.
The rollover and placing offer comes ahead of the maturity of an existing issue of zero preference shares on 31 October 2012.
The company, which just completed a £209m refinancing of its secured borrowings, said that after carrying out the new offer it will have completed its group refinancing exercise, with a balanced and staggered debt maturity profile of 4, 10, 15 and 20 years.
The proposals include issuing 22m shares, which are priced at 100p each, for a term of four years with the final capital entitlement being paid in 2016.
Owners of the group’s existing zero dividend preference shares – issued by subsidiary IRET – can exchange their 2012 ZDP shares for the new shares, 2016 ZDP, based on the accrued capital entitlement at the rollover date.
A placing will also provide new investors with an opportunity to invest in the proposed issue.
The gross redemption yield of the 2016 ZDP shares will be determined by way of a book-build reflecting orders received pursuant to the proposals.
Potential investors will be asked to indicate the number of 2012 ZDP shares they wish to exchange via the rollover offer, or through the placing, at different gross redemption yields ranging from 6.5% to 8.0%.
The rollover and placing orders will then be aggregated and the gross redemption yield set at a point where demand exceeds the minimum issue size of £20m.
Picton said: “On completion of the proposals, the group will be able to manage its debt position effectively and, over time, reduce its gearing level by optimising the timing of asset disposals, and, if appropriate, using any excess income, to purchase 2016 ZDP shares in the market;
“The amortisation profile on the new senior debt facilities is expected to improve the cover of the 2016 ZDP Shares over time; and a 2016 ZDP share issue will allow the group to have lower levels of debt against which its LTV covenants are measured providing greater operational flexibility.”
Picton chairman Nick Thompson said: “Having diversified and secured favourable terms on our senior debt in July, the Board considered a number of proposals for financing the ZDPs.
“We decided that the rollover offer and placing is in the best interests of shareholders as it provides the group with flexibility in the short term, while providing the headroom to drive income through active management of the portfolio over the long term.”
Picton chief executive Michael Morris said: “The proposals are aimed at concluding this significant refinancing exercise and are intended to provide the Group with the flexibility to manage down its debt position within a sensible timeframe.”
bridget.o’connell@estatesgazette.com
