Redefine has announced the conclusion of a deal that will see global private investment firm, Starwood Capital Group, acquire its 111.9 million shares in the UK-based RDI REIT for 95 pence per share. This deal represents a 20.9% premium to the ruling share price.
The disposal generates Redefine £106.3 million, which translates at the current exchange, rate to R2.3 billion.
A portion (49.8 million RDI shares) of Redefine’s investment in RDI is encumbered by an exchangeable bond it issued in September 2016. Redefine has made a tender offer to the holders of the outstanding €150 000 000, 1/50% Secured Exchangeable Bonds due September 2021, exchangeable into the ordinary shares of RDI, of which €117.2 million are presently outstanding.
Undertakings from bondholders (in support of the tender offer totalling 77.1% of the amount outstanding) has been received.
Redefine’s financial director Leok Kok says that the disposal of the RDI shares and the settlement of the bonds (assuming all bonds are redeemed) will reduce Redefine’s loan-to-value ratio by approximately 1.1%.
Following the disposal, which is denominated in pound sterling and, the redemption of bonds pursuant to the tender offer, which is denominated in Euro, Redefine will restructure its pound sterling debt portfolio.
Chief Executive Officer, Andrew Konig says the exit out of RDI substantially advances the Company’s stated intention of simplifying and solidifying its asset platform as well as eliminating multiple entry points for South African equity investors into the same investment opportunities. Furthermore, it also improves the company’s risk profile through eliminating a risk universe over which it has no direct management influence.
He says that Redefine’s strategic intent to strengthen its balance sheet, recycle non-core assets and boost liquidity continues to place the company in a strong position to withstand the risks and challenges of the current uncertain operation environment.
The disposal will also allow Redefine to re-strategise and re-allocate its financial and capital resources to position the company for sustained value creation in a post COVID-19 environment.
“In the prevailing environment, the knowns are outweighed by evolving unknowns. Our intention is to ensure we can manage the variables under our control while being extremely well placed to benefit once conditions improve,” concludes Konig.
Source: Propertywheel.co.za | https://propertywheel.co.za/2020/06/redefine-announces-r2-3bn-divestment-of-rdi/