Summerset bonds aimed at 'mums and dads'
Stock Exchange-listed retirement operator Summerset Group has launched a $100 million bond offer to "mum and dad" investors.
Chief executive Julian Cook said the company had received firm indications from brokers there was sufficient appetite from investors for the issue plus another $25m worth.
As with most bond offers, they are secured by mortgages over the assets of Summerset and they rank behind creditors but ahead of shareholders who generally have few if any rights in the event of company collapse.
The investment statement spells out clearly the possibility of total loss. However, analysts consider Summerset among the leaders in the sector.
Investors will have to go through their own brokers or enlist with one to subscribe.
Summerset is offering an interest rate of 4.78 per cent and will pay back the bonds after a six year term.
This compares with mainstream bank five-year term interest rates of up to 4.3 per cent.
Cook said the bond issue was the first for Summerset and the first for the aged care sector.
It allowed Summerset to obligations diversify its borrowing over different time periods and would allow the company to reduce its bank funding from $300m to $211m.
Cooks said if things changed quickly in the market a company could have problems refinancing and this might interrupt development programmes.
The bonds complement existing syndicated loan facilities which were refinanced in March.
Summerset intends to quote these bonds on the NZX debt market which means they may be sold before the end of their term if there are interested buyers.
The price sellers would obtain would vary depending on the financial condition of the Summerset Group and movements in market interest rates.
Summerset is one of New Zealand's largest retirement village and aged care developers and operators, owning 21 retirement villages with plans to continue building additional villages.
The lead brokers are ANZ, Deutsche Craigs, First NZ Capital Securities, and Forsyth Barr.