Galileo Japan Trust will use the $153 million raised through an institutional placement to stabilise its capital structure and allow for the reinstatement of distributions.
While its diversified portfolio of retail and offices assets is said to generate solid rents, the debt was deemed unmanageable and in need of restructuring.
At its results for the year to June 30, the directors revealed unless the senior loan due in March 2014 of $399 million was refinanced, it was unlikely the trust would be able to meet its financial obligations.
Under the refinancing proposals, the trust will issue eurobonds through the Japanese TK business (the direct owner of the assets) to raise ¥6 billion ($68 million) and refinance the existing senior loan with a new ¥30 billion ($340 million) five-year debt facility.
The units were offered at $1.50 apiece and Galileo Funds Management participated with a $5 million investment in the placement.
The trust held the placement through Moelis & Co and Macquarie Capital.
Galileo was founded by Neil Werrett, a co-owner of the champion racehorse Black Caviar, and listed in December 2006. It owns 21 properties across Japan with a value of about $650 million.
Galileo Fund Management's chief operating officer, Peter Murphy, said the proposal effectively represented a relaunch of trust and would allow distributions to be reinstated. He said a loan from Galileo Finance, being a partnership between Forum Partners and Mr Werrett, had also been repaid as part of the latest funding scheme.