THE FKP Property group plans to raise about $208 million through a six-for-seven "non-renounceable entitlement offer" at 20? a security. The offer equates to the issue of about 1.04 billion new securities, with the cash used to pay off debt.
Its largest shareholder Mulpha, with 26 per cent, will take up its entitlement. Stockland will also take up its rights.
The offer was issued at a deep discount to the last traded price of 38? before the stock went into a trading halt.
The offer, which was underwritten by Goldman Sachs, was unveiled at the same time as FKP released a statutory loss of $350.3 million for the year to June 30. That compares with a net profit of $82.3 million in the 2010-11 year. An annual distribution of 2.8? was paid, down from 3? in the previous year.
The group did not issue guidance for 2012-13 except to say the directors "target stronger 2013 financial year performance in a tough trading environment".
Contributing to the loss was a 24 per cent write-down in the fair value of the retirement portfolio and a 48 per cent reduction in contributions from the residential arm.
Excluding the write-downs, profits for the year to June 30 were $94.7 million, which was in line with market guidance, but down 22 per cent on the previous year. The commercial and industrial division performed well, with the newly refurbished 465 Victoria Avenue, Chatswood, tower well leased.
The chief executive, Peter Brown, attributed the earnings decline to the challenging market conditions and specifically the delay of settlements at the Aerial apartment development in Camberwell, Melbourne.
He said FKP would try to reduce debt further in the coming year through asset sales and a stringent capital management policy. It would also focus on bolstering its residential and commercial development projects.
Earlier this month, Mr Brown flagged his intention to retire from FKP by February after the completion of a strategic review of its retirement portfolio.
"FKP is continuing to explore a demerger or other separation of its retirement and development/property trust businesses," he said. "Over the medium term, FKP will continue to seek to reposition the retirement business model to meet evolving resident needs with continuum of care a key focus."
Macquarie Equities said participation in the entitlement offer at 20? offered value, "however we note that FKP still need to de-gear further and thus the stock will continue to trade below fair value in our view".