St Modwen to launch £100 mln Convertible Bonds offering (UK)

The Offering forms part of St. Modwen’s wider financial strategy to diversify debt funding sources for the Group, lower debt costs and extend maturities, taking advantage of current favourable market conditions. The net proceeds of the Offering will be used to refinance existing bank debt.

St. Modwen recently published strong operational and financial results for the financial year ended 30 November 2013 including a 56% increase in profit before tax and a 10% increase in EPRA Net Asset Value and continues to make good progress on its residential and commercial activities including major projects at New Covent Garden Market in Nine Elms, London; Longbridge in Birmingham and Swansea University’s Bay Campus.

The Bonds will be issued by St. Modwen Properties Securities (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 Issuer and will be subject to a negative pledge in customary Eurobond form.

The Bonds will be issued at par and are expected to carry a coupon of between 2.625% and 3.125% per annum payable semi-annually in arrear and will, subject to certain conditions and a cash settlement option at the discretion of the Company, be convertible into preference shares of the Issuer which will be automatically and mandatorily exchangeable into fully paid ordinary shares of the Company or, if the cash settlement option is exercised by the Company, the equivalent amount in cash for such Shares. The initial conversion price is expected to be set at a premium of between 27.5% and 35% above the volume weighted average price of the Shares from market open to close of trading on 26 February 2014. The conversion price will be subject to customary adjustment provisions set out in the terms and conditions of the Bonds. Settlement is expected to take place on or about 6 March 2014.

The Issuer will have the option to call all outstanding Bonds at par plus accrued interest (i) on or after 27 March 2017 if the value of the underlying Shares per Bond equals or exceeds 130% of the principal amount of the Bond for at least 20 out of 30 consecutive dealing days which must end no earlier than 5 dealing days prior to the date on which notice for redemption is given or (ii) at any time, if less than 15% of the principal amount of the Bonds originally issued remains outstanding. If not previously converted, redeemed or purchased and cancelled, the Bonds will be redeemed at par on 6 March 2019.

It is intended that an application will be made for the Bonds to be listed on a recognised stock exchange (as such term is defined in section 1005 of the Income Tax Act 2007) and admitted to trading prior to the Bond’s first interest payment date (expected to be 6 September 2014).

J.P. Morgan Securities plc (which conducts its investment banking business in the UK as J.P. Morgan Cazenove) and The Royal Bank of Scotland plc are acting as Joint Bookrunners in relation to the Offering.

Source: FTI Consulting

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