Capital Shopping Centres to tap bond market for £300m in cash

 
Kasmira Jefford
Follow Kasmira
CAPITAL Shopping Centres (CSC), the UK’s largest shopping centre owner, has become the latest listed property firm to turn to the market for cash after it launched a £300m bond issue yesterday.

The owner of malls including the Trafford Centre in Manchester and Lakeside in Essex, is offering £300m of senior, unsecured convertible bonds due in 2018, with an option to increase the offering by £50m.

In a statement the company said it aims to use the funds primarily to pay down debt after buying Nottingham’s Broadmarsh Centre earlier this year and to diversify its sources of funding. It also plans to use the funds to push ahead with its development pipeline.

The offer comes a day after rival developer Hammerson announced its own €500m bond issue and just weeks after British Land raised £400m in convertible bonds.

The sector has been keen to shift its sources of funding away from costly bank debt and property companies have rushed to take advantage of a strong demand from institutions for corporate debt.

The five year bond are expected to carry a coupon of between 1.75 per cent and 2.25 per cent with an expected premium of 30 per cent to 35 per cent on conversion.

1 per cent over fears that the bond issue will dilute CSC’s share value by around five per cent.

ADVISERS

RUPERT HUME-KENDALL
BANK OF AMERICA
MERRILL LYNCH

CAPITAL Shopping Centre’s £300m bond issue announced yesterday marks Rupert Hume-Kendall’s second major deal of the week after he acted as joint-bookrunner and adviser on Capital and Counties’ £149m share placing on Wednesday.

It also continues what has been a rewarding year for Hume-Kendall, chairman of global capital markets at Bank of America Merrill Lynch. In January the veteran dealmaker successfully floated the Russian-based oil explorer Ruspetro, raising £163m in London’s first sizeable IPO of the year. In May he helped BAML execute one of the largest block trades of the year, the sale of a £1.2bn package of Reckitt Benckiser shares on behalf of its largest shareholder, investment firm JAB Holdings. He also successfully advised venture capital group 3i on its defence against activist shareholder Laxey Partners.

Working with him on the CSC bond issue was UK corporate and investment bank head Simon Mackenzie-Smith and Oliver Holbourn, head of equity capital markets (ECM) for Europe, Middle East and Africa.

The bank has a long-standing relationship with CSC, advising it since before it demerged from Capital & Counties in 2010 and was still known as Liberty International.

Meanwhile, UBS is acting as sole global co-ordinator and joint bookrunner to CSC, with Armin Heuberger, head of equity-linked EMEA leading the team. A team at Credit Suisse including managing director Mark Hammarskjold is also acting as bookrunner on the deal.