Artis REIT announces $40 million convertible debenHighlights:
$40M Capital Raise - Series E
Interest Rate of 7.5%
First Interest Payment December 31 2009
Option to Convert at Unit Price of $9.30
Artis Expects to Have $90M Unencumbered Properties for "New Acquisition Credit Line"
My take, Artis has a property portfolio acquisition in mind and is preparing their balance sheet accordingly. Artis also pays no interest on these debentures until year-end giving them plenty of time to do a deal. Interim, cash flow increases since interest payments will be lower.
A positive development for the REIT.
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Artis REIT announces $40 million convertible debenture offering
/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED STATES/
WINNIPEG, June 25 /CNW/ - Artis Real Estate Investment Trust ("Artis" or
the "REIT") (TSX: AX.UN) ) is pleased to announce that in connection with the
proposed public offering (the "Offering") of convertible unsecured
subordinated debentures previously announced on June 24, 2009, it has entered
into an agreement with a syndicate of underwriters led by Canaccord Capital
Corporation and CIBC World Markets Inc. and including BMO Capital Markets,
National Bank Financial Inc., RBC Capital Markets, Scotia Capital Inc., TD
Securities Inc., Blackmont Capital Inc., Desjardins Securities Inc., Macquarie
Capital Markets Canada Ltd. and Brookfield Financial Corp. (collectively, the
"Underwriters") for the purchase by the Underwriters of $40,000,000 aggregate
principal amount of Series E convertible unsecured subordinated debentures
(the "Series E Debentures").
The Series E Debentures will bear interest at a rate of 7.50% per annum
and will be payable semi-annually on June 30 and December 31 until maturity on
June 30, 2014. The first interest payment date will be December 31, 2009. The
Series E Debentures will be convertible at the option of the holder into trust
units ("Units") of Artis at any time prior to maturity at a conversion price
equal to $9.30 per Unit (the "Conversion Price"). The Series E Debentures will
not be redeemable by Artis prior to June 30, 2012. On or after June 30, 2012,
but prior to June 30, 2013, the Series E Debentures will be redeemable, in
whole or in part, at a price equal to the principal amount plus accrued
interest, at Artis' option on a minimum of 30 days notice, provided that the
weighted average trading price of the Units is not less than 125% of the
Conversion Price. On and after June 30, 2013, the Series E Debentures will be
redeemable, in whole or in part, at a price equal to the principal amount plus
accrued interest, at Artis' option on a minimum of 30 days notice. The payment
of principal and interest on the Series E Debentures will have priority on
payment of distributions on Units, but will be subordinate in right of payment
of senior indebtedness of Artis. The Series E Debentures will rank pari passu
in right of payment with Artis' other convertible debentures.
Artis has granted the Underwriters an over-allotment option to purchase
up to an additional $6,000,000 principal amount of Series E Debentures,
exercisable at any time up to 30 days from the closing of the Offering.
Artis intends to use the net proceeds from the Offering to repay certain
indebtedness and for working capital purposes. Once these funds have been
deployed, Artis will have approximately $11.4 million of mortgage principal
maturing in 2009 and $58.4 million in 2010, representing 12 mortgages. Artis
expects to have approximately $90 million of unencumbered properties available
as security for the existing or a new acquisition line of credit.