Frasers Commercial Trust, Singapore’s third-biggest office property trust, said it plans to buy an office building in the city-state and raise $888.9 million to repay maturing debt.
The trust obtained $675 million in two loans and plans to raise $213.9 million selling stock in a three-for-one rights offer, it said in a statement today. Frasers Commercial will offer 2.25 billion shares at 9.5 cents apiece, a 60% discount to yesterday’s closing share price of 24 cents.
“It is critical for the refinancing of the maturing debt to take place for FCOT to remain as a going concern,” the trust said in the statement.
Frasers Commercial, also known as FCOT, is seeking to reduce debt after Standard & Poor’s affirmed its “BB” long- term debt rating with a negative outlook on June 17. The trust had $945.5 million of debt as of March 31, of which $624.5 million is due in the second half of this year, Frasers Commercial said in the statement.
The refinancing will be granted subject to the completion to the completion of the rights offer and the acquisition, the trust said in a separate statement.
“There is no certainty that FCOT will be able to extend its debt maturing in 2009 or obtain alternative financing proposals should these transactions not proceed,” it said.
‘Stronger’
Frasers Commercial will buy Singapore’s Alexandra Technopark office block for $342.5 million from a unit of Fraser & Neave, according to the statement. Fraser & Neave, Singapore’s biggest beverage maker, is the trust’s biggest shareholder, according to data compiled by Bloomberg.
“FCOT is put in a place where it will come up stronger,” Hui Choon Kit, deputy group financial controller of Fraser & Neave, said in a briefing today.
Frasers Commercial, which was halted from trading pending today’s announcement, was unchanged at 24 cents at the close of trading yesterday. The stock gained 78% since reaching a record low of 13.5 cents on March 9.
The trust was known as Allco Commercial REIT until Fraser & Neave took it over in August. The trust’s portfolio consists of nine office blocks in Singapore, Australia and Japan, as well as an investment in an unlisted office fund in Australia, according to its website.
DBS Group Holdings, Oversea-Chinese Banking Corp., Standard Chartered Plc and Commonwealth Bank of Australia arranged the loan.
Source : The Edge – 30 Jun 2009