CITY Pacific is giving investors in the frozen City Pacific First Mortgage Fund a choice to either swap their units for ordinary shares in the company or exit, when the freeze is lifted in September.
City Pacific’s company secretary James Finucan said the board is in the process of considering a number of restructuring proposals intended to generate liquidity for investors in the $1 billion First Mortgage Fund who may wish to redeem.
Finucan said an indicative proposal involves an offer to investors who wish to redeem all or part of their investment in the FMF in exchange for ordinary shares in City Pacific.
Finucan this proposal will provide the FMF Investors with liquidity and an ability to exit at will through the share market.
“Those Investors who wish to remain in the FMF may do so,” he added.
“The board has instructed independent advisers to produce an independent experts report in order to determine which proposal provides the maximum benefit for both investor and shareholders.
“The basis of each proposal is to ensure that both FMF investors and the City Pacific shareholders receive the utmost benefits in respect to their current position,” he continued.
“The board of City Pacific anticipates that the independent experts report will be provided before June 30 2008,” Finucan concluded.
The FMF continues to pay monthly and quarterly distributions to its investors following the decision by the board in March this year to defer the payment of redemptions for a period of up to 180 days.
Earlier this month, the FMF finalised negotiations with financier to extend the repayment of the FMF’s banking facilities until July 31.
The FMF has a number of loans scheduled to be repaid during June which will enable it to reduce its obligations to its bankers.
In addition, the FMF debt to its bankers has been reduced from $240 million to $180 million.
City Pacific’s corporate facility is scheduled to be repaid in October 2008 and the directors are confident of significantly reducing this facility prior to the repayment date. The reduction will be made through a number of transactions including the sale or joint venture arrangements of certain assets held by City Pacific.
Australian Property Journal
