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Keppel-KBS US Reit to raise US$93.1m from 295-for-1,000 rights issue
THE manager of Keppel-KBS US Reit (real estate investment trust) announced late on Monday night the launch of an underwritten and renounceable rights issue to raise gross proceeds of around US$93.1 million.
Both Keppel Capital Investment Holdings and KBS SOR Properties will take up their full entitlement of the rights units, but the Reit manager will not be subscribing for its pro rata share of the rights units.
The 295-for-1,000 rights issue of 186.24 million new shares will be offered at US$0.50 apiece (see amendment note). The price is a 30.1 per cent discount to the Reit's closing price of US$0.715 per unit on the Singapore Exchange on Oct 22, 2018 - being the last trading day of the units prior to the announcement of the rights issue - and a 24.9 per cent discount to the theoretical ex-rights price of US$0.666 per unit.
The gross proceeds of US$93.1 million from the rights issue will partially finance the proposed acquisition of the Westpark Portfolio, a business campus comprising 21 freehold buildings in the Seattle-Tacoma-Bellevue Metropolitan Statistical Area in Washington, which is estimated to cost around US$169.4 million in total.
Specifically, US$89.7 million will partially fund the proposed acquisition, with US$3.4 million portioned off for estimated fees and expenses incurred in connection with the rights issue. The remainder, if any, will be used for general corporate purposes.
In its announcement late on Monday, Keppel-KBS US Reit said the Singapore Exchange had on Oct 22, 2018 given its in-principle approval for the listing and quotation of the right units on the mainboard.
The Reit also expects the rights issue to increase its market capitalisation, which may "help to improve the trading liquidity" of its units listed on the Singapore Exchange.
DBS Bank and United Overseas Bank (UOB) are the joint lead managers for the rights issue, while DBS Bank, UOB and Credit Suisse (Singapore) are the joint underwriters.
Keppel-KBS US Reit ended trading on Monday at US$0.715 apiece.
Amendment note: An earlier version of the story said the offer price was US$0.05 per share, when it should have been US$0.50. The story above has been revised to reflect this.