CapitaLand Retail China Trust to raise at least S$300m for acquisition

CAPITALAND Retail China Trust (CRCT) on Tuesday launched an equity fundraising to finance part of its proposed purchase of interests in business parks and a Guangzhou mall.

The private placement's indicative issue price range is S$1.193 to S$1.236 per new unit.

That represents a discount of about 3.4-6.8 per cent to CRCT's closing price of S$1.28 on Monday. Also, it is at a 4.1-7.5 per cent discount to the volume-weighted average price (VWAP) of S$1.2891 per unit of all trades on Monday.

Meanwhile, the preferential offering will carry an issue price between S$1.17 and S$1.21 per new unit, which is at a 5.5-8.6 per cent discount to Monday's close and a 6.1-9.2 per cent discount to the VWAP.

CRCT aims to raise gross proceeds of no less than S$300 million, or about S$325 million if an upsize option is exercised for the placement.

The private placement of 184.4 million new units to institutional and other investors will raise gross proceeds of at least S$220 million. If upsized to issue up to an additional 21 million new units, it will raise another S$25 million.

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The pro rata and non-renounceable preferential offering of up to 69 million new units to eligible unitholders will raise about S$80 million. The record date is Nov 25 at 5pm.

CRCT's manager, in its own capacity, and Retail Crown, both wholly-owned subsidiaries of CRCT's sponsor CapitaLand, have each irrevocably undertaken to take up their entire provisional allotments of units under the preferential offering.

These allotments correspond to their direct interests in CRCT - the manager has a 6.31 per cent stake while Retail Crown owns 19.09 per cent.

Also, Retail Crown will subscribe for additional preferential-offering units in excess of the pro rata units, amounting to CapitaLand Integrated Commercial Trust's (CICT) total provisional allotment that corresponds to CICT's direct 10.82 per cent stake in CRCT. Retail Crown will only apply for excess units based on the balance amount of CICT pro rata units that are unsubscribed by CICT's trustee.

Earlier this month, CRCT said it was looking to buy interests in five business park properties in Suzhou, Xian and Hangzhou as well as the remaining 49 per cent stake in the Rock Square mall, at an agreed property value of about 4.95 billion yuan (S$1.01 billion).

The trust plans to acquire 51 per cent of the Ascendas Xinsu portfolio, the entire interest in Ascendas Innovation Towers, 80 per cent of Ascendas Innovation Hub, as well as 80 per cent of phases one and two of the Singapore-Hangzhou Science and Technology Park.

Net proceeds from the equity fundraising will partially finance the total acquisition cost of about S$822.4 million, the manager said on Tuesday.

If the gross proceeds amount to about S$300.7 million - assuming the placement and offering are priced at the lower ends, and the placement is not upsized - some S$293.9 million will go into partially financing the proposed acquisition, while S$6.8 million will be used to pay the estimated fees and expenses.

Any balance of the gross proceeds will be used for general corporate and/or working capital purposes.

The joint global coordinators and bookrunners for the equity fundraising are Citigroup Global Markets Singapore, DBS and HSBC's Singapore branch.

Trading in CRCT's units was halted on Tuesday morning, before the announcement. The counter closed at S$1.28 on Monday, up S$0.02 or 1.6 per cent.