Property company needs cash

Property company manager Augusta Capital is intending to raise $45 million from investors to pay back debt and stabilise the business.

The company plans a placement of $12.4m of shares to institutional shareholders and through an offer of $32.6m of shares on the basis of one share for 1.9 shares held.

Australia’s Centuria launched a $180m takeover bid for Augusta Capital, offering $2 a share, at the beginning of the year but withdrew the offer at the end of March following the impact of Covid-19 on the property market.

In a letter to shareholders, Augusta Capital chairman Paul Duffy said Centuria’s shareholding would not exceed 24.99 per cent of Augusta’s shares after completion of the offer and was in accordance with the Covid-19 Takeovers Code exemption notice and the terms of the consent granted to Augusta under the Overseas Investment Act.

‘‘Covid-19 has had a significant impact on our business, including two new fund offerings that did not proceed – the Augusta Tourism Fund and the Augusta Property Fund – resulting in additional strain on our balance sheet and lost offerer and underwriting fees,’’ Duffy said.

‘‘The proceeds from the equity raised will be used to repay debt, restore financial flexibility for future property fund offerings and will allow Augusta to defer development activity and retain property assets until offering conditions improve.’’

The business was also reducing overheads and deferring nonessential expenditure and cash outflows. The board had decided not to pay a fourth-quarter dividend. Future dividends depended on a ‘‘sustained recovery in profitability’’.

Centuria was expected to have a minimum shareholding of 19 per cent following completion of the institutional component of the entitlement offer and a maximum shareholding of 24.99 per cent after completion of the equity raise.