Villa World bond offer

GOLD Coast developer Villa World will be only the third Australian company to launch a simple corporate bond offering as its prepares to ramp up growth.

The developer yesterday launched an $80 million capital raising to fund an aggressive acquisition program in east coast corridors.

Villa World is seeking to raise around $50 million through a Simple Corporate Bond (SCB) offering to institutional and retail investors.

Only two companies have issued SCBs previously – mutual organisation Australian Unity and Perth-based residential developer Peet.

The five-year bonds will have a floating interest rate to be determined after the bookbuild, due to be completed on March 29.

Separately, as the Bulletin reported yesterday, Villa World is chasing $30 million – $20 million through an equity placement and $10 million through a share purchase plan.

A total of 8,888,889 shares will be issued at $2.25 each, a 5.46 per cent discount to the last closing share price of $2.38 in a placement underwritten by stockbroker Morgans.

Managing director Craig Treasure said the use of SCBs allows the company to spread risk as it adds to its development pipeline.

The move is in addition to Villa World’s recent extension of debt facilities with ANZ and Westpac banks.

“This is all about diversifying our financial strategy,” Mr Treasure said. “It gives us more flexibility in our debt capacity and offers investors greater return at less cost.”

Mr Treasure said Villa World has built a strong position in the equity market and aims to do the same in the bond sector.

“This is not a one-off transaction. We are looking to issue more bonds in future,” he said

“SCBs will enable Villa World to achieve current objectives and also provide ongoing access over three years to go back to the market with relative simplicity. This will support our ongoing strategy and growth program.” Mr Treasure expects strong support from new investors and existing shareholders.

He said Villa World was targeting acquisitions in southeast Queensland and Melbourne.

“We have sites on the Gold Coast, in Brisbane and Melbourne under due diligence,” he said.

The company has a five to six-year project pipeline in growth corridor “hot spots”.

“Villa World has been actively restocking its project land bank during the past four years, almost tripling its lot portfolio in that time,” Mr Treasure said.

Villa World has spent $164 million in land acquisitions this financial year, for an expected yield of more than 2300 lots.

The company has about 4000 shareholders on its register, an equal mix of retail and institutional investors. The company is targeting Earnings Per Share growth of more than 10 per cent.

Villa World shares are expected to return to the board today after the equity raising is completed.