Perennial Real Estate Holdings Limited Retail Bonds – Risk

Perennial Real Estate Holdings Limited (Perennial) offers to public up to $150 million of Bonds.

Bonds details:
Interest rate = 4.65% p.a paid semi-annually
Tenor = 3 years maturing 23 October 2018
Issue price = $1 per $1 in principal amount of the Bonds

“Net proceeds will be used for general corporate purposes, including refinancing of existing borrowings and financing of working capital, investments (including mergers and acquisitions) and/or capital expenditure requirements of the Issuer or the Group.” (Source: Perennial’s Product Highlights Sheet)

Financial position of Perennial as at 30 June 2015:
Total assets = $6,202 million
Total liabilities = $2,348 m
Equity = $3,853 m

Of the total liabilities, loans and obligations:

  1. Long term Loans and borrowings = $1,441 m
  2. Junior bonds = $143 m (secured bonds on CHIJMES & TripleOne Somerset)
  3. Current liabilities, loans and borrowings = $237 m
  4. Current liabilities, Trade and other payables = $389 m

Cash and cash equivalents as at 30 June 2015 = $94 m

This Retail Bonds (4.65%) has lower interest rate compared to earlier issues of borrowings.

“PCRT issued $130.0 million 6.375% Fixed Rate Notes due September 2015 and $50.0 million 5.25% Fixed Rate Notes due July 2016, under its MTN Programme.” (Source: Perennial accounts for 12 months ended 30 June 2015)

Please note that the Retail Bonds (4.65%) is not secured on any properties of the Perennial group unlike secured bank borrowings. “The Bonds would rank below existing secured borrowings of the Group (amounting to $1,216.1 million as at 30 June 2015).”

One risk of the Retail Bonds is re-payment in full if the business runs into financial difficulties before maturity in three years time.

Copyright © 2015, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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