Aspen Group’s Aspen Parks Property Fund has unveiled plans to tap the market for nearly $40 million, in the wake of the developer and funds manager lodging a statutory loss of $81.8 million.
APPF said it would offer one new share for every two held, at an issue price of 49 cents, to raise $39.9 million to reduce its debt and increase its capacity to expand its portfolio.
The fund manages 21 properties across Australia that provide accommodation services for the tourism, resources and affordable housing sectors.
Since June 30 last year, the value of its portfolio has fallen by $63.5 million, causing the fund’s loan to value ratio to increase to 54.8 per cent at the end of June 2014.
As well as managing the fund, Aspen Group holds a 12.5 per cent stake in the entity and will subscribe for its full entitlement of $5 million worth of shares from the offer.
The investment will be funded from Aspen’s existing cash reserves and debt facilities.
Aspen also announced its financial results today, lodging a statutory loss of $81.8 million.
Revenue was down 14.4 per cent, to $25.3 million, while at June 30, Aspen Group had $26.8 million in debt and cash holdings of $44.7 million.
Aspen Group chief executive Clem Salwin said the recapitalisation of APPF would help strengthen its market position in the accommodation sector.
“One year ago, we set aside our strategic objectives for the year to execute a transition of the business to be focused on value for money accommodation,” he said.
“The business will be simpler, have lower debt and a lower cost base.
“We have made significant progress on these strategic objectives.”
Mr Salwin said the Aspen Group had made significant progress in selling off its commercial portfolio, with just two assets – the Spearwood Industrial Estate and a warehouse site in Melbourne’s Noble Park – remaining unsold.
Negotiations for the sale of the Noble Park industrial property are at an advanced stage.
“Debt levels have been significantly reduced and our debt facility has been simplified into a single, lower cost facility,” Mr Salwin said.
“Importantly, as the business has simplified, overhead costs have been reduced markedly and operating costs continue to be reduced.”
He said Aspen had also received an unsolicited offer for its 12.5 per cent stake in APPF, from Ingenia Communities Group.
However, the highly conditional offer to pay $5 million for the stake was not considered suitable by Aspen’s board of directors.
Earlier this month, Ingenia made another bid to acquire 100 per cent of the shares in APPF, in an all-scrip transaction.
Aspen said it would negotiate with Ingenia to determine if a suitable offer can be developed.
Mr Salwin said the group’s focus in FY2015 would be to finalise the sale of its non-core assets and build its position in the accommodation sector.
“We continue to actively pursue, and remain open to, all opportunities to create value for shareowners,” he said.
At 1:00PM, WST, Aspen Group’s shares were up 0.4 per cent, trading at 124.5 cents.
