CRCT has announced the private placement of 57m new units, raising gross proceeds of ~S$86.1m. The private placement was upsized from the original offer of S$75.0m, due to strong demand. In connection with the private placement, the manager of CRCT intends to declare an advanced distribution of CRCT’s distributable income for the period from 1 Jul to 1 Nov 2012, the day immediately prior to the date on which the new units will be issued, to existing unitholders of CRCT. The new units will not be entitled to the advanced distribution. The issue price of S$1.51 per new unit represents a discount of ~5.8% to CRCT’s adjusted volume weighted average price of S$1.603 per unit on the full market day on 24 Oct 2012 and subtracting the advanced distribution of approximately 3.22 S cents per unit. We reduce our fair value from S$1.71 to S$1.56 and downgrade CRCT from Buy to HOLD.
Private placement
CRCT has announced the private placement of 57m new units, raising gross proceeds of ~S$86.1m. The private placement was upsized from the original offer of S$75.0m, due to strong demand from over 30 existing and new investors from Asia, the United States and Europe. The issue price of S$1.51 per new unit represents a discount of ~5.8% to CRCT’s adjusted volume weighted average price of S$1.603 per unit on the full market day on 24 Oct 2012 and subtracting the advanced distribution of approximately 3.22 S cents per unit (as explained below). The 57m new units will bring the total number of issued and issuable units up to ~749m.
Advanced distribution of ~3.22 S cents
In connection with the private placement, the manager of CRCT intends to declare an advanced distribution of CRCT’s distributable income for the period from 1 Jul to 1 Nov 2012, the day immediately prior to the date on which the new units will be issued, to existing unitholders of CRCT. The new units will not be entitled to the advanced distribution. The next distribution will comprise CRCT’s distributable income for the period from the day the new units are issued, being 2 Nov, to 31 Dec 2012. Half-yearly distributions will resume thereafter. The books closure date for the advanced distribution is 1 Nov 2012 at 5 p.m. and the advanced distribution will be paid on or around 30 Nov 2012.
Increasing strength of balance sheet
The manager of CRCT says that the private placement strengthens the balance sheet and provides greater capacity for potential growth opportunities. With the placement, the debt-to-asset ratio declines from 30.6% as of 30 Sep 2012 to ~29%.
Downgrade to HOLD
We adjust our model for the private placement and roll forward our DDM valuation to FY13. We reduce our fair value from S$1.71 to S$1.56 and downgrade CRCT from Buy to HOLD on valuation grounds. We estimate a FY13 distribution yield of 5.4%.
CRCT has announced the private placement of 57m new units, raising gross proceeds of ~S$86.1m. The private placement was upsized from the original offer of S$75.0m, due to strong demand from over 30 existing and new investors from Asia, the United States and Europe. The issue price of S$1.51 per new unit represents a discount of ~5.8% to CRCT’s adjusted volume weighted average price of S$1.603 per unit on the full market day on 24 Oct 2012 and subtracting the advanced distribution of approximately 3.22 S cents per unit (as explained below). The 57m new units will bring the total number of issued and issuable units up to ~749m.
Advanced distribution of ~3.22 S cents
In connection with the private placement, the manager of CRCT intends to declare an advanced distribution of CRCT’s distributable income for the period from 1 Jul to 1 Nov 2012, the day immediately prior to the date on which the new units will be issued, to existing unitholders of CRCT. The new units will not be entitled to the advanced distribution. The next distribution will comprise CRCT’s distributable income for the period from the day the new units are issued, being 2 Nov, to 31 Dec 2012. Half-yearly distributions will resume thereafter. The books closure date for the advanced distribution is 1 Nov 2012 at 5 p.m. and the advanced distribution will be paid on or around 30 Nov 2012.
Increasing strength of balance sheet
The manager of CRCT says that the private placement strengthens the balance sheet and provides greater capacity for potential growth opportunities. With the placement, the debt-to-asset ratio declines from 30.6% as of 30 Sep 2012 to ~29%.
Downgrade to HOLD
We adjust our model for the private placement and roll forward our DDM valuation to FY13. We reduce our fair value from S$1.71 to S$1.56 and downgrade CRCT from Buy to HOLD on valuation grounds. We estimate a FY13 distribution yield of 5.4%.
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