Centurion invites noteholders to exchange, sell S$60m notes

WORKER and student accommodation provider Centurion Corp is inviting holders of its existing S$60 million due-2022 notes to exchange them for new 3.5 year notes at a premium and/or to sell them for cash at par.

It is looking to exchange any and all of those outstanding notes for a like principal amount of new Singapore dollar-denominated 3.5 year fixed-rate due-2024 notes, which will carry a higher coupon rate.

Centurion plans to exercise its option to redeem all the outstanding existing notes on the interest payment date of Feb 1, 2021, the mainboard-listed company said in a bourse filing on Monday. It will give notice of this early redemption by Jan 8, 2021.

The existing notes are paying a 5.5 per cent coupon, although this rate would have increased to 8 per cent starting Feb 1, 2021 if they were not redeemed.

"Given the impending redemption of the existing notes, Centurion has received interest from major noteholders who would like to extend their bond investment and remain invested in Centurion and its subsidiaries," the company said on Monday. It thus made the exchange offer on the back of such investor interest.

Noteholders will receive an exchange premium in cash that is 0.25 per cent of the principal amount offered for exchange, plus accrued interest and S$250,000 in principal amount of the new notes, for each S$250,000 principal of the existing notes offered.

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Through the exchange premium, Centurion aims to "recognise and reward noteholders who have supported and will continue to support the group through their investments".

The new notes are expected to be issued on Oct 12, 2020 and mature on April 12, 2024, and will come under Centurion's S$750 million multicurrency debt issuance programme.

They will carry a 5.75 per cent coupon until April 11, 2023. This rate will increase to 8.25 per cent from April 12, 2023 if any of the new notes are not redeemed by then.

On top of the new notes, Centurion may issue additional notes to investors regardless of whether they are existing noteholders, under the same S$750 million debt issuance programme.

Subject to the company issuing these additional notes, Centurion is also inviting the existing S$60 million noteholders to offer to sell any of the outstanding notes back to the company for cash, up to the aggregate principal amount of gross proceeds raised from the additional notes.

This conditional tender offer is meant to "minimise negative cash carry arising from the issuance of the additional notes", said Centurion.

The tender price will be 100 per cent of the principal amount of the existing notes, and holders will also receive accrued interest.

If the additional notes are not issued, the tender offer will be terminated. The company will announce the pricing of any issue of such notes on or about Oct 5 this year.

If Centurion decides to sell the additional notes, an existing noteholder who wishes to purchase them will be eligible to receive priority allocation at the company's discretion.

The total principal amount of the new 3.5 year notes and the additional notes will not exceed S$60 million, "in line with the group's prudent debt management strategy", Centurion said. Both issuances will be fungible and consolidate into the same series.

The company added that it will have the sole and absolute discretion whether to accept any and all offers to exchange or offers to sell from noteholders.

DBS is the appointed sole dealer manager for the invitation, and Tricor Barbinder Share Registration Services is the appointed exchange and tender agent.

Noteholders have until noon on Oct 2 to submit their forms to the agent to make an offer to exchange and/or an offer to sell.

Given that Centurion intends to redeem all the outstanding S$60 million notes on Feb 1, 2021, any existing notes that are not exchanged or purchased by that date will be redeemed at par together with interest accrued.

Shares of Centurion rose 0.5 Singapore cent or 1.5 per cent to trade at 34.5 cents as at 9.12am on Monday, after the announcement.