Corio has completed the issuance of US$980 million of the US$1,210 million (€920 million) of senior unsecured notes through a private placement to 33 institutional investors. Closing of the remaining US$230 million is due to take place in May 2007.
The proceeds will be used to refinance parts of the existing debt and to finance projects currently in the pipeline. The transaction is in line with Corio's internal guideline to finance between 1/3 and 2/3 of its debt at fixed rates and to aim for an average financing term of more than 5 years.
The original issue size of US$400 million was increased to US$1,210 million in response to very strong demand at attractive pricing levels. The greater part of the notes have been swapped into Euros, except for US$190 million that is used to refinance the investment in Akmerkez. The average interest rate of all notes is approximately 4.8%. The notes are rated NAIC-1.
The senior unsecured notes consist of four tranches with maturities of 7 years (US$150 mln.), 10 years (US$528 mln.), 12 years (US$400 mln.) and 15 years (US$132 mln). The notes have an overall average maturity of approximately 11 years. As a result of the private placement, the average remaining term of that debt has increased from 4.8 years (year-end 2006) to around 8 years. The proportion of loans at fixed rates went from 47% (year-end 2006) to 67% as per 31 March 2007.
The net proceeds will be used to refinance parts of existing debt and to finance projects currently in the pipeline. The undrawn committed borrowing capacity increased from €140 million year-end 2006 to €670 million as of 31 March 2007. This will cover Corio's financing needs up to at least mid 2008. The average outstanding debt amount for 2007 will be approx. €2.3 billion, whilst the average interest rate rises from 4.1% in 2006 to 4.5% in 2007.
Under the terms of the private placement, Corio is obliged to maintain a minimum interest cover ratio of 2.2. At the end of 2006 the interest cover ratio for Corio was 4.2. Corio's leverage at year-end 2006 was 35.8%, considerably below the 55% maximum applicable to Corio as included in this private placement.
The Royal Bank of Scotland and JP Morgan acted as agents in this transaction.