Precinct Properties 4 Year Convertible Notes (PCTHA)

[peat]

Precinct Properties New Zealand Limited (Precinct) has announced an offer of up to $150 million of subordinated convertible notes (Notes), paying at least 4.8% p.a for four years

The convertible element is a little bit interesting in that it provides potential upside due to the way it is structured.

The Conversion Price is the lesser of:

the Conversion Price Cap of $1.40; and
a 2% discount to the Market Price (referred to below as the discounted approach).



Effectively if the share price is above 1.40 in four years Note holders will benefit.

Issuer:
Precinct Properties New Zealand Limited

Instrument:
Fixed rate, unsecured, subordinated convertible notes

Maturity Date:
27 September 2021 (4-year convertible note)

Issue Rating:
The Notes will not be rated.

Size:
Up to NZ$150 million, with the ability to accept up to a further NZ$50 million in oversubscriptions

Interest Rate:
Minimum 4.80%

The indicative margin range above the 4-year swap rate for the Notes is 2.25% to 2.45% per


The oversubscription of the Heartland Bank offer has confirmed there is a lot of money looking for a home..........

[mcdongle]

Is the interest paid quarterly?

[peat]

Is the interest paid quarterly?

yes it is.

[mcdongle]

Thanks....

[voltage]

i am ignorant in this area of finance, is this a good deal?

[peat]

i am ignorant in this area of finance, is this a good deal?

Its difficult to answer that categorically voltage, but in the fixed interest arena at the moment its is pretty good in my opinion.
In the last two weeks Heartland bank offered 4.5% for five years, ANZ Bank offered 3.7% for 5 years , so 4.8% with some potential for upside on the conversion strikes me as attractive.
Of course one needs to be comfortable with the solidity of the Issuer, i.e will they be able to pay you back at maturity? I consider that Precinct has a quality property portfolio and is not overly leveraged so in my view it is very unlikely they will experience difficulty within four years and so it is very likely you will get repaid (in shares) at maturity. They will convert the notes to shares at a minimum of $1.02 and possibly more. At that point of course you can sell those shares to release your cash.

So in a few words, if you are a fixed interest investor then yes - I think it is a good deal.

[aajm1490]

Hi all,

Apologies for being slightly off-topic; I'll keep this as short as possible.

Colmar Brunton is conducting some research on behalf of the Financial Markets Authority (FMA) about what information investors find most helpful to make informed decisions about particular investments. This will help the FMA improve product disclosure documents to make them more useful for investors. We're looking for people to take part in paid research interviews at our Auckland and Wellington offices over the next few weeks.

We'd like to talk with you if you have recently invested in the Precinct Properties' subordinated convertible notes.

Your contact details and the feedback you provide in interviews will be completely annonymised and will not be used for any other purpose. If you are interested in taking part, please email ali.ajmal@colmarbrunton.co.nz with your contact details including a phone number.

Cheers

PS: If you're interested, please get in touch via the email above as direct messages on ST won't be acknowledged.
PPS: This message was cleared with an ST Admin before being posted.

[Out to lunch]

Does anyone know what the acquisition settlement obligation is? I know not that material.

Forecasted development profit of $242m from Bowen and Commercial Bay will add some nice breathing room. Add that on to the NTA calculation and you get around 4c above $1.40.

[peat]

brutal scaling on this...
I would envisage they will list at a premium
Priority offer is the way to go
if you own Precinct ordinary shares - fill your boots up.

[Beagle]

Shame that someone didn't point out that formal expressions of interest needed to be in by Friday 1 September and a client service agreement completed too.
Several wasted hours of my life researching this on the weekend that I cannot get back. Not impressed !

[peat]

Hey Rog
I am sorry you feel that way and I certainly had no intention to mislead
These offers come and go pretty quickly at the bidding and allocating level.

[macduffy]

Shame that someone didn't point out that formal expressions of interest needed to be in by Friday 1 September and a client service agreement completed too.
Several wasted hours of my life researching this on the weekend that I cannot get back. Not impressed !

Moral of the story:

Always start research of an IPO/issue with a quick perusal of the indicative timetable! I've fallen into that particular trap once or twice.

:(

[Bjauck]

Shame that someone didn't point out that formal expressions of interest needed to be in by Friday 1 September and a client service agreement completed too.
Several wasted hours of my life researching this on the weekend that I cannot get back. Not impressed ! It may still be possible to go on a waiting list (in case some of those who have expressed an interest fail to follow through perhaps.)

[peat]

It may still be possible to go on a waiting list (in case some of those who have expressed an interest fail to follow through perhaps.)

sure , but at the moment everyone is taking whatever they are offered.

I guess what we are learning is how much cash there is out there looking for a home, and on that basis one would expect rates to stay low for some time yet.

Dont forget guys that there are some debt securities out there on the secondary market offering higher than 4.5
I find too many people are fixated on the primary market, I guess to avoid fees. but ultimately one needs to do the maths and see how little the fees actually impact on 5 year instrument.

[mcdongle]

I thought about this, The shares yield a bit more and its a PIE

[Grimy]

Shame that someone didn't point out that formal expressions of interest needed to be in by Friday 1 September and a client service agreement completed too.
Several wasted hours of my life researching this on the weekend that I cannot get back. Not impressed !
On the bright side, research is never really wasted. May come in handy as it is possible further offers similar to this may become available in the near future.
Disclosure: I got some. Had wanted more, but as Peat mentioned, demand was high and scaling was probably always going to happen.

[Beagle]

I have moved on from yesterday's disappointment...today will probably have enough problems of its own. It occurs to me there's a lot of people running scared at the moment for obvious reasons and are therefore attracted to an issue like this. I expect as we head towards the election and with ongoing ructions in the markets caused by heightened geopolitical tensions there could be some very compelling equity opportunities in the market this month. "Be greedy when others are fearful" Warren Buffet.

[Out to lunch]

Allegedly, bids for the $125 million exceeded $300 million. Wonder what the scaling is on the retail offer

[peat]

OTL, it was about a third from my experience.
It will now be interesting to see if there is any scaling on the priority offer which allowed shareholders to apply for these notes on a priority basis

[Gonzo]

these are in the money, been one of my
better decisions