TSX:AX.PR.E - Post by User
Comment by
commoditiesbullon Jun 24, 2009 5:27pm
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Post# 16096134
RE: halt trading
RE: halt tradingArtis REIT did an unsecured convertible debenture offering (see my prior post). This is great news for the company.
I tried to get some but the issue is completely sold-out as of 5:06PM today!
The offering size is $40M and the interest rate is set at around 7.5%, which is a very attractive price for Artis to raise capital at. They are using the issue to repay debt. Their bank debt carries a 5.5% average cost of capital meaning that the offering will have minimal impact to cash flow (less than a 1% impact) as this is in essence a debt for debt capital structure change. However, the capital raise significantly enhances the near term credit strength, especially when combined with recent asset dispositions.
Artis is now well capitalized into 2011. Unit yield of 13% is very attractive given their capital strength and low payout ratio. The fact that they did not have to issue 13% yielding units of AX.UN but instead could issue 7.5% debentures suggests that AX.UN units are significantly undervalued.