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SLPF raises money while it can

St Laurence Property & Finance Group has launched an $18.19 million rights issue, moving now because in four or six months times will be tougher.

Tuesday, March 18th 2008, 2:25AM

by Neill Briss

"I'm concerned things are going to get worse rather than better," executive chairman Kevin Podmore said at the launch. It might not be able to get such capital in six months.

Podmore said many brokers told St Laurence wasn't a good time for an issuer, but among financial planners the group has used, the opinion was probably 50:50 between those who will recommend it and those who won't.

It would be tough to get the funds in, he told a briefing.

It will use funds raised on its present portfolio, rather than on new assets. The issue had been reduced from $24m to focus on these, Podmore added. It would not be in a separate trust account. He expects the company will make $10m on the two projects. This hasn't been put in the prospectus, he added. It is a "ball park number".

St Laurence has heads of agreement with the tenants, and the projects won't proceed if they aren't signed up. Molesworth Street won't start until January. It will take 18 months to complete them.

St Laurence has cash from various asset sales. "For example, touch wood, Rural Equities …"

Rural Equities' board will meet on March 28, to approve sale of St Laurence's remaining shareholding to a related party. This will raise $4m. St Laurence is also looking to sell two buildings on the North Shore.

"Plus we have got cash reserves. There is a pool of funds which will be used to repay debt and to undertake developments and other commitments."

The 26.9 million one-for-five rights is of $1 convertible notes, offered at 70c. They carry a coupon rate of 9% on the $1 principal, making the effective rate 12.85%. St Laurence shares have been trading on Unlisted at 76c. The rights will also trade on Unlisted.

Discussions with the NZX stalled in February because information requirements above those of the Securities Act would have delayed the issue. St Laurence still plans to list its shares with NZX by March 2009.

Podmore says the rights issue price is equivalent to a 48% discount to net tangible asset backing of the borrowing group. The goal was to put those buying in on the same terms as existing note holders. All will convert 1:1 to ordinary shares in December.

St Laurence says it will use the money for opportunities in the current portfolio and to repay maturing debentures. Podmore named two opportunities as 139 King Street and 55 Molesworth Street. He said the firm had prospective tenants for at least half of the King Street office building and over 100% of Molesworth Street.

"Our concern is these tenants won't be sitting round for ever."

IRD is due to quit the Molesworth St building at the end of the year. Unless redeveloped, St Laurence may be left with a vacant building for as long as 24 months.

The offer opens on March 31 and rights trading begins that day. The offer closes on April 15.

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Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.69 2.79
ANZ 4.44 3.15 3.25 3.39
ANZ Special - 2.55 2.69 2.79
ASB Bank 4.45 2.55 2.69 2.79
Bluestone 3.49 3.49 3.49 3.49
BNZ - Classic - 2.55 2.69 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.15 3.29 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
Lender Flt 1yr 2yr 3yr
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online 2.95 1.99 2.35 2.45
Heretaunga Building Society 4.99 3.50 3.40 -
HSBC Premier 4.49 2.45 2.60 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 3.69 2.45 2.65 2.79
Kainga Ora 4.43 2.93 3.07 3.24
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.40 3.30 3.54 3.54
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.55 2.79 2.79
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.35 2.99 3.35
Lender Flt 1yr 2yr 3yr
SBS Bank 4.54 3.05 2.99 2.99
SBS Bank Special - 2.55 2.49 2.49
The Co-operative Bank - First Home Special - - - -
The Co-operative Bank - Owner Occ 4.40 2.55 2.69 2.79
The Co-operative Bank - Standard 4.40 3.05 3.19 3.29
TSB Bank 5.34 3.29 3.45 3.59
TSB Special 4.54 2.49 2.65 2.79
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 ▼3.09 3.29 3.39
Westpac - Offset 4.59 - - -
Westpac Special - ▼2.49 2.69 2.79
Median 4.55 2.94 2.99 2.80

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