8 May 2009

Big shareholder not happy at $201 million rights issue

5:56 am on 8 May 2009

AMP NZ Office Trust is seeking to raise $201 million - but the move has raised the ire of its second largest shareholder.

The largest office landlord in New Zealand plans to raise the money through a renounceable rights issue, and will use the proceeds to pay down debt as part of a banking agreeement.

But ING, one of its largest shareholders, says it is hugely disappointed by the move, because it will dilute the value of investors' holdings.

ING investment manager Craig Tyson says $201 million is 8% of the entire listed property sector, which is a huge amount of money to raise at this time.

He says the office trust should have tried to sell properties, before going to investors for such a large sum of equity.

AMP NZ Office Trust needs to raise the money to meet a new banking agreement, to reduce its debt from $242 million to $100 million.

Chief executive Rob Lang says the trust's gearing will reduce from 34%, to 19.3% - which he says is a safe range to ride out any further deterioration in the property market.

Mr Lang says underlying earnings are holding up well. Distributable profit rose 4.7% to $42 million in the nine months to the end of March, compared with the same period last year.

Including non-cash adjustments, the trust made a loss of $141 million.