SINGAPORE (June 18): Units in ESR-REIT took a tumble in morning trading on Tuesday after the manager announced that the price of some 194.2 million new units to be issued under a private placement has been fixed at 51.5 cents per unit.
The manager says the private placement saw strong participation from new and existing institutional and other investors. The upsize option has also been exercised in full, increasing the aggregate gross proceeds raised via the private placement to approximately $100 million.
It adds that the private placement was approximately 2.5 times covered, based on aggregate gross proceeds of approximately $100 million.
The issue price for the private placement is at the low end of the proposed range. ESR-REIT on Monday announced it will offer the new units at an issue price of between 51.5 cents and 52.5 cents.
At 51.5 cents, the private placement issue price represents a 8.3% discount to the volume weighted average price (VWAP) of 56.16 cents per unit that ESR-REIT traded at from the preceding market day on June 14 up to the signing of the placement agreement on June 17.
The private placement is part of a proposed equity fund raising exercise for the repayment of debt, the acquisition of a property at 48 Pandan Road, and asset enhancement initiatives (AEIs) at 7000 Ang Mo Kio Avenue 5 and UE BizHub EAST.
See: ESR-REIT proposes equity fund raising to raise gross proceeds of up to $150 mil to finance property acquisition, AEIs
It also includes plans for a non-renounceable preferential offering of new units to existing unitholders to raise gross proceeds of up to $75 million.
The structure and timing of the preferential offering, which is not expected to be underwritten, have not yet been determined. Details will be announced later.
The manager says it has “no intention” of raising aggregate gross proceeds of more than $150 million.
Approximately $44.4 million, or 44.4% of the gross proceeds of the private placement, will be used to fully finance the total acquisition costs of 48 Pandan Road.
Some $26.2 million, or 26.2% of the gross proceeds of the private placement, will be used to partially finance the proposed AEIs.
In addition, $26.3 million, or 26.3% of the gross proceeds of the private placement, will be used to partially finance the debt repayment.
The remaining $3.1 million will be used to pay for the transaction related expenses, including the estimated underwriting and selling commission and expenses related to the equity fund raising.
As at 10.31am, units in ESR-REIT are trading 7.1% down at 52.5 cents.
