Grainger asks for more cash
GRAINGER joined its property peers yesterday by announcing it will raise £250m in a rights issue to boost its ability to snap up acquisition opportunities.
The group, which said it had swung to a £3m pre-tax loss in the year to 30 September, compared to £12m profits the year before, said it will issue 277m new shares in a two-for-one rights issue priced at 90p per share – a 66.8 per cent discount to Wednesdays closing price.
The group’s current net debt stands at £1.56bn – but Grainger said that £104.5m of the net proceeds of the rights issue will be used to prepay and cancel debt. Of the balance of £133.4m, £68.5m will be used to reduce (but not cancel) debt until acquisition opportunities arise.
The £173m reduction of debt will reduce its net debt to £1.32bn – and provide sufficient headroom on its banking facilities to make acquisitions.
Last month Grainger struck a deal with a consortium of banks over its lending facilities. The new agreement will see the property landlord not having to pay off £900m of maturing debt until 2011.
Chief executive Andrew Cunningham, who took the role last month after former boss Rupert Dickinson stepped down due to ill health, said: “This strengthened financial position will ensure the group is well placed to use its market-leading position in the residential market to make compelling acquisitions which should enhance shareholder value over time.”
ALEX MIDGEN ROTHSCHILD
ADVISER TO GRAINGER
GRAINGER appointed Rothschild and JP Morgan Cazenove to work as advisers on its £250m rights issue.
JP Morgan Cazenove’s team was led by head of real estate corporate finance Robert Fowlds, along with Jonathan Wilcox and Bronson Albery.
Rothschild used managing director Nigel Himsworth , assistant director Paul Mitchell and property star Alex Midgen.
Midgen, a former surveyor at DTZ, joined Rothschild in 1994. Midgen’s breakthrough came after a critical mass of high-profile deals including advising diamond magnate Simon Glick’s bid for Canary Wharf and Guy Hands on his consortium’s €7bn bid for Viterra. Midgen now sits on the board of Songbird as a non-executive director. Midgen has made a name for himself as the antithesis of many brash investment bankers.