UPDATE 1-Australia's GPT to raise up to $1.3 bln to cut debt
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SYDNEY, Oct 23 (Reuters) - Australian property trust GPT Group (GPT.AX) moved on Thursday to raise up to A$1.9 billion ($1.28 billion) to cut debt and ease concerns over its future in a plan backed heavily by its state-owned Singapore investor.
GPT, one of Australia's top-five listed property vehicles, said it would raise at least A$1.3 billion through a deeply discounted 1-for-1 rights issue and also issue $250 million in convertible debt to a unit of one of Singapore's investment arms.
It also ditched its offshore expansion strategy.
"GPT will prudently exit overseas assets and return to its core focus," it said in a statement, adding that it would now focus exclusively on high-quality Australian real estate.
"Following the capital raising, GPT will have sufficient liquidity to fund all capital expenditure requirements and debt maturities into 2010," it said, adding that the new capital also gave the group more time to consider asset sales.
Australia's listed property sector has been among the biggest casualties of the global credit crunch, having come under selling pressure well before the global financial crisis escalated in August into the worst since the Great Depression.
But GPT has been hit especially hard, given that it had borrowed in foreign currencies and was exposed to the past few weeks' dramatic slide in the Australian dollar.
The local currency has lost 32 percent of its value against the U.S. dollar in the past three months.
The raising also comes as GPT has struggled to sell off its Voyages Lodges chain of eco resorts and its U.S. seniors housing business to shore up its balance sheet.
The lynchpin of the plan is GIC Real Estate, part of the Government of Singapore Investment Corporation, which in turn manages well over $100 billion in foreign exchange reserves.
GPT said GIC Real Estate had agree to not only take up its entitlement under the rights issue, which is overwhelmingly an institutional offering, but also underwrite the retail offer and also take up the $250 million in convertible notes.
That would give GIC an interest of 12-18 percent of GPT and a seat on the board, though GPT had also signed a separate agreement effectively obliging GIC not to block any change of control provided a majority of GPT shareholders supported it.
GPT said the rights issue would be priced at A$0.60-$0.75 per share, a 35-48 percent discount to its last share price.
GPT's shares last traded at A$1.15, ahead of a trading halt which GPT placed on its shares on Wednesday after a newspaper reported it was preparing to raise A$1 billion priced at as much as a 50 percent discount to its last trade.
The group had a net asset backing of A$3.68 a share as of June 30. ($1=1.490 Australian Dollar) (Reporting by Sonali Paul and Mark Bendeich; editing by Jonathan Standing)
