PROPERTY darling Charter Hall has not being overwhelmingly received by mums and dads investors, despite the backing from Melbourne's Gandel Group.
The property funds manager is the first group in the A-REITs sector amongst the recent flurry of capital raisings, to report a shortfall in subscriptions.
CHC’s retail entitlement offer raised approximately $14 million, representing a retail investor participation rate of 81%.
Including Gandel’s institutional offer and placement, CHC has raised approximately $56 million – which falls short of CHC’s intended $73 million capital raising initiative. The shortfall was 9.61 million securities.
The allocation of securities to retail investors is subject to the Gandel Group subscribing for the full amount of its underwriting commitment of approximately $13 million.
But CHC said Gandel will take up the retail shortfall, raising approximately $3 million, which is less than the full amount of its underwriting commitment.
Had the retail component went according to plan, Gandel’s interest in CHC would have been 15%. Because of the shortfall Gandel’s stake in CHC will be just 11.2%.
But as part of agreement, CHC must use its “best endeavour” to help Gandel have a 15% interest in the company, CHC will use issue an additional 8.9 million securities by way of a private placement to Gandel to lift Gandel’s interest in CHC will be 12.2%.
However, CHC said after the private placement, it has no further obligation to use its reasonable endeavours to ensure Gandel achieves a holding of 15%.
Meanwhile as a result of the private placement issue to Gandel, retail investors who elected to subscribe to additional securities above their entitlements, will be issued refunds.
Australian Property Journal
