HEDLEY Leisure and Gaming Property Fund said proceeds from the sale of its stake in ALE Property Group have been used to repay debt.
HLG which is due to make an announcement today relating to the sale of assets.
“In conjunction with our advisers, the board of HLG has been undertaking a review following approaches it had for all or part of the fund’s assets. This included an approach for HLG’s holding in ALE. As a result, HLG has sold the majority of its securities in ALE at an attractive price,” HLG’s chairman Colin Henson said.
Henson added that as a result of the transaction, HLG’s debt is reduced and its gearing improved.
He further said the fund is able to focus on its core pub freeholds.
“Woolworths acquisition of the ALE securities confirms the attractive nature of the pub freehold asset class,” Henson said.
The fund has approximately $56 million net of costs up front. The $3.50 per ALE stapled security represents a premium of $0.34 per stapled security over yesterday’s closing price of $3.16 and a premium of 23% to the 30 day VWAP of $2.84, and comprises a $3.34 per stapled security upfront and distribution of 0.16 cents per security for the 6 month period ended June 30.
The ALE stapled securities had a book value of $4.00 in HLG’s balance sheet which was set at the time of the IPO when the ALE stapled security price was trading at $4.20.
Henson said HLG now has net debt of $750 million and remains in compliance with its financial covenants.
“Further, HLG has offered its bank syndicate a reduction in debt limits by $100 million to $810 million, thereby reducing the unnecessary undrawn credit line costs of the fund,” he concluded.
In other news, ANZ Bank announced it has a 14% interest in HLG as a result of Opes Prime.
Australian Property Journal
