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Derwent London plc Convertible Bond Offering
Derwent London plc (the “Group”, the “Company” or “Derwent London”) has set the terms of its offering of £150m of Convertible Bonds due 2019 (the “Bonds”).
The Bonds will be issued at par and have a coupon of 1.125% per annum payable semi-annually in arrear. They will, subject to certain conditions, be convertible into fully paid Ordinary Shares of the Company (“the Shares”). The initial conversion price has been set at £33.35, a premium of 35% above the volume weighted average price of the Shares from launch to pricing on 17 July 2013.
The Bond offering forms part of a wider financial strategy to lower debt costs, extend maturities and provide an appropriate mix of secured and unsecured debt for the Group taking advantage of current favourable market conditions. Derwent London’s strategic aim is to move towards a target for unencumbered assets representing at least 50% of the total property portfolio over the next 12 months. The Company intends to use the net proceeds of the offering to refinance property acquisitions totalling approximately £93m made in the last 12 months, to help fund its significant development pipeline and to increase resources for future acquisition opportunities.
Derwent London has a committed capital expenditure programme of around £400m and is currently on site at projects totalling in excess of 400,000 sq ft (37,200m2). Over the next 12 months the Group will start construction of a further 345,500 sq ft (32,050m2). Following the expected completion of the sale of 1-5 Grosvenor Place SW1, Derwent London will still have 2.5 million sq ft (232,000m2) of space that could potentially be delivered by 2020.
The Group intends to announce its interim results for the six month period ended 30 June 2013 on 15 August 2013. Our performance is anticipated to be in line with the Group’s expectations.
The Bonds are expected to be issued by Derwent London Capital No. 2 (Jersey) Limited, a wholly-owned subsidiary of the Company incorporated in Jersey, and will be guaranteed by the Company. The Bonds will be senior and unsecured obligations of the Company and will be subject to a negative pledge.
It is intended that an application will be made for the Bonds to be listed on the Official List and admitted to trading on the Professional Securities Market of the London Stock Exchange prior to the first interest payment date (expected to be 24 January 2014).
Settlement is expected to take place on or about 24 July 2013 (the “Settlement Date”).
John Burns, Chief Executive Officer of Derwent London said:
“We are very pleased with the result of this bond offer which reflects the confidence that the market has in the Group’s property and financing strategy. The high level of demand has enabled us to lower the coupon to 1.125% and to set the conversion premium at the top end of the range.”