Corio successfully raised € 417 million of funds in a debt private placement at attractive terms. This debut offering in the private placement market closed yesterday. Maturity is seven years (€ 164 million) and ten years (€ 253 million). The proceeds are used for general corporate purposes and to refinance existing financial indebtedness.
The transaction is in line with the Company’s policy to extend the term of its debt. It also provides for a diversification of its lending base. As a result of the transaction the average remaining term of its long-term debt has increased from 4.9 to 6.5 year. The issue has met strong demand in the market. Before completing this financing, Corio undertook an extensive road show in the United States and Europe to present Corio’s operational and financial strategy and to inform investors about the European property sector. Reportedly, the transaction is one of the largest of its kind for a European property company or for a listed Dutch company. The transaction attracted more than $ 700 million (equivalent) of interest from 18 investors with bids in US Dollars, Euros and Sterling.
With such strong support at very attractive pricing levels, the Company elected to upsize the transaction from an initial $ 150 million, placing $ 511 million with 13 investors. The proceeds have been swapped into euro’s at floating rate. The Royal Bank of Scotland, as exclusive agent, assisted Corio in this transaction.
The debt ranks pari passu with the Company’s unsecured debt. Under the terms of the debt private placement, Corio is obligated to maintain a minimum interest cover ratio (net rental income / net paid interest) of 2.2 compared to a minimum ratio of 2.5 for its bank loans. The actual interest cover ratio for the results over the first half of 2004 is 5.1.