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  • Shopping centre giant Vicinity Centres (VCX) is looking to raise $1.4 billion to strengthen its balance sheet
  • This money will be raised through a $1.2 billion placement and a $200 million share purchase plan
  • The outcome of the placement will be announced tomorrow and shares will be issued on June 4
  • Once the placement is completed, Vicinity Centres will allow eligible shareholders the ability to purchase up to $30,000 worth of new shares
  • Due to COVID-19 and the closure of many retail stores, Vicinity Centres’ income has been significantly impacted
  • The $1.4 billion will help strength the company’s financial position
  • Vicinity Centres share price is steady today and shares are trading for $1.61 each

Shopping centre giant Vicinity Centres (VCX) is looking to raise $1.4 billion to strengthen its balance sheet. 

This money will be raised through a $1.2 billion placement and a $200 million share purchase plan. 

“We are taking decisive action today to strengthen our balance sheet and provide Vicinity with flexibility to respond to the uncertainty caused by COVID-19 and the evolving retail landscape,” CEO and Managing Director Grant Kelley commented. 

“This equity raising also provides support for the continuation of Vicinity’s investment-grade credit ratings,” he said. 

Placement 

Shares under the placement will be issued at $1.48 each which represents an 8.1 per cent discount to the last closing price of $1.61 on May 29 and a 10.6 per cent discount to the five-day volume weighted average price of $1.656. 

Shares under the placement will be settled on June 4 and will begin trading on the ASX on June 5. 

The Gandel Group has also committed to subscribe for $100 million of new shares. 

Share Purchase Plan 

Once the placement is completed, Vicinity Centres will allow eligible shareholders the ability to purchase up to $30,000 worth of new shares. 

These shares will price lower than the placement and have a two per cent discount to the volume weighted average of the five days leading up to the share purchase plan. 

The company hopes to raise $200 million from this. 

The share purchase plan will open on June 9 and close on July 6. Shares will then be issued on July 13 and can begin trading on the ASX on July 14. 

COVID-19 Update 

Due to COVID-19 and the closure of many retail stores, Vicinity Centres’ income has been significantly impacted. 

During the pandemic, the company undertook the Federal Government’s SME Commercial Code of Conduct and Leasing Principles During COVID-19 which allowed retailers to temporarily waiver or defer rent payments. 

Vicinity Centres hopes that once stores re-open and foot traffic increases it will start to see more retailers pay their rent. 

During the height of COVID-19 Vicinity Centres put a number of measures in place to enhance its liquidity and reduce operating costs. 

These measures included establishing $300 million of new debt facilities and extending $650 million of existing facilities, deferring non-critical spending, and reducing hours for the majority of staff. 

The company also reduced the salaries of Directors and the Executive Committee and cancelling its FY20 incentive program. 

“This equity raising, combined with a range of cost and capital reductions implements to date, significantly strengthens Vicinity’s financial position,” Grant said. 

“It provides capacity to invest in our assets to ensure they continue to deliver on consumer, retailer and community expectations,” he added. 

To further strengthen its balance sheet, Vicinity Centres withdrew its FY20 earrings and distribution guidance in mid-March and will be paying any distribution for the six months ending June 30. 

Company shares are steady today and are trading for $1.61 each at 2:35 pm AEST.

VCX by the numbers
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