GOOD old Primelife, now in its 16th year on the Australian Stock Exchange, is set to undergo a major restructure that will see it create a new $1.84 billion entity with Babcock & Brown.
The new entity, Babcock & Brown Communities Group, will be the largest listed “pure play” owner, operator and developer of senior living communities.
In order to create BBC, under the restructure proposal, Primelife will buy the balance of 74.7% of PrimeLiving Trust and Babcock & Brown’s 55% interest in the development joint venture.
BBC will conduct a major capital raising to raise a minimum of $300 million at $1.15 per security and upon the implementation of BBC, acquire the assets of the WA based Fini Villages.
Primelife shareholders can subscribe to $50 million under a priority offer. BBC’s expected shareholding will be: current Primelife shareholders – 37%; Babcock & Brown – 10%; New BBCG stapled security holders – 48%; and MFS – 5%.
Primelife’s chairman professor Judith Sloan said this is an exciting opportunity for Primelife shareholders to be part of an industry leading investment platform in senior living as it will allow Primelife to accelerate its business plan, achieve an operational footprint across
Upon completion of the restructure proposal, including the acquisition of the Fini Portfolio, BBC will comprise 61 senior living communities including 44 retirement villages and 17 aged care facilities, with over 6,200 retirement village units and 941 aged care beds, providing care to over 8,300 residents.
In addition, BBC will have a substantial identified development pipeline with landbank for over 2,000 retirement village units across 18 sites and 171 aged care beds to be developed largely over the next six years.
BBC’s target will be to deliver and sell approximately 300 new ILUs per annum over the long term.
BBC has forecast pro forma revenue of approximately $169 million for the financial year ending June 30 2008 and distributions of 9% per annum for payment of Babcock & Brown’s full Base Fee in FY09 and FY10.
BBC will have an enterprise value of $950 million; and total EBITDA of $81 million.
The BBC boards will comprise independent Chairman – Judith Sloan; independent non-exec director – Andrew Love; independent non-exec director – Graeme Martin; executive director – Robert Topfer; executive director – Andrew Schwartz; and managing director – John Martin. Joanna Wakefield, CFO of Primelife will become CFO of BBC.
Babock & Brown’s global head of corporate finance Rob Topfer said BBC marks the beginning of the next chapter of Primelife and Babcock & Brown’s relationship.
“We have significant experience in the sector having originated and executed eight separate transactions over the last two years, valued in excess of $500 million, none of which were part of public auctions,” he added.
The directors of Primelife have unanimously recommended shareholders support the restructure proposal in the absence of a superior proposal. Board members intend to vote in favour of the restructure proposal in respect of their own holdings of Primelife shares.
Australian Property Journal