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Thursday, November 19

DNZ Property Fund Limited to undertake public offer




DNZ Property Fund Limited (“DNZ”) today announced that it is seeking to raise $130 million from new and existing shareholders as part of a proposed listing on the New Zealand Stock Exchange.

Company Chairman Tim Storey said the $130 million capital raising was fully underwritten by Goldman Sachs JBWere (NZ) Limited with proceeds being used to reduce existing bank debt and fund the termination and assignment of the existing management arrangements.

“DNZ has undertaken a strategic review of options over the past few months and we believe the combined capital raising, internalisation of the management arrangements and proposed listing is the best alternative for our existing shareholders and the longer term strength of the company,” says Mr Storey.

“Our Board views this as an appropriate time to address the Company’s capital structure and we believe it is important to reduce our gearing to levels more appropriate in the current market and to levels that would ensure support from institutional and other new investors.

“DNZ has a significant New Zealand property portfolio.  The portfolio is diversified both geographically and by sector and features a weighted average lease term (WALT) of 4.9 years and an occupancy rate of 96%.

“DNZ has the size and scale to be a relatively large company on the NZX and is expected to be eligible for inclusion in the NZX’s Top 50 companies. A listing will provide existing shareholders with liquidity and greater levels of disclosure, which is something we have been working to deliver for our shareholders.”

The $130m IPO features a $30 million priority pool reserved for existing shareholders and a $100 million offer to institutions and NZX Primary Market Participants.  Oversubscriptions of up to an additional $10 million may be accepted under the priority pool. 

The offer price is 82 cents per share, following the 2 for 5 share consolidation undertaken earlier this week.  Existing shareholders will receive a personalised mail out early next week containing details on the priority offer. 

DNZ is also offering a share sale facility under which existing shareholders may be able to sell their shares concurrently with the Offer at the same offer price. 
“We have had strong interest in the capital raising from institutional investors and this interest has been attributed in large part to the features of DNZ post completion of the restructuring being undertaken as part of the capital raising,” said Mr Storey.

“Market interest has been increased by our decision to terminate the management contract currently held by DNZ Management Ltd and internalise the management function within DNZ. Paul Duffy will continue as CEO and have an ongoing investment in DNZ.  This internal management structure is unique compared to NZX50 companies in the NZX Property Index.”

The Independent Directors had the management contract independently valued.  The shareholders of the Manager will re-invest approximately 50 per cent of the proceeds from the termination payment into shares that will be held in embargo for up to 18 months.