Keppel Infrastructure Trust (KIT) will be launching a private placement of between 456.6 million and 469.5 million new units to raise gross proceeds of at least $200 million. The units will be issued to eligible institutional and other investors at an issue price range of between 42.6 cents and 43.8 cents per placement unit. The range represents 6% to 8.6% to the volume weighted average price (VWAP) of 46.62 cents per unit of all trades conducted on Aug 26.
The issue price will be determined by the joint lead managers, bookrunners and underwriters after a book-building process.
DBS Bank, The Hongkong and Shanghai Banking Corporation Limited, Singapore Branch, (HSBC Singapore), Oversea-Chinese Banking Corporation Limited (OCBC), RHB Bank Singapore and United Overseas Bank U11 Limited (UOB) were appointed as the joint lead managers, bookrunners and underwriters.
The announcement, dated Aug 27, comes after unitholders approved the issuance of up to 1.06 billion new units in KIT at an extraordinary general meeting (EGM) on April 23.
Keppel Infrastructure Holdings Pte. Ltd. (KIHPL), a wholly-owned subsidiary of Keppel, is KIT’s sponsor and largest unitholder. As at Aug 27, it has a direct interest in 18.21% of KIT’s units in issue amounting to 1.02 billion units. KIHPL has irrevocably undertaken to KIT’s trustee-manager that it will subscribe and pay for the placement units to maintain its 18.21% stake following the placement.
Some $193.2 million from the proceeds raised from the private placement will partially pay for the outstanding amount drawn on the bridge facility that was used to acquire Ventura Motors. Another $5.4 million will pay any fees and expenses incurred from the private placement while $1.4 million will pay KIT’s existing debts. Any remaining balance will be used to repay existing debt, fund capital expenditures, or potential future acquisitions.
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On Feb 5, KIT said it was acquiring a 98.6% stake in Ventura Motors for an enterprise value of A$600 million ($540 million). The acquisition was completed on June 3 for some $550 million, which was initially funded with a combination of internal sources of funds and external borrowings including a term loan facility of up to $400 million. As at June 3, KIT’s trustee-manager has drawn down some $391.8 million of the bridge facility.
Stub distribution
The trustee-manager says it intends to declare an advanced distribution from July 1 to the date before the issue of the placement units. The quantum of distribution under the stub distribution will be 0.7 cents per unit.
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The stub distribution is to “ensure fairness” to the holders of the existing units. As such, the next distribution will comprise KIT’s distributable income from the placement settlement date to Dec 31. The placement units, when issued, will rank equally to the other existing units.
On a pro forma basis, KIT’s funds from operations (FFO) would have been at $296.8 million, 3.1% higher than the actual FFO of $287.9 million. The pro forma FFO is adjusted for the acquisition, $200 million in perpetual securities issued by the trustee-manager on Aug 2, as well as the placement.
For the 1HFY2024, KIT’s pro forma FFO would have been $157.6 million, up from the actual FFO of $151.5 million and the actual adjusted FFO of $150.6 million.
KIT’s pro forma distribution per unit (DPU) for FY2023 would have been 4.09 cents from its actual 3.86 cents while 1HFY2024 DPU would have been 2.03 cents, up from its actual DPU of 1.95 cents.
The placement is expected to close on Aug 28. The last day of cum trading for the stub distribution is on Sept 2. The record date for the stub distribution is on Sept 4. The placement units are expected to be issued on Sept 5. Unitholders will receive their stub distribution payments on Sept 18.
Units in KIT closed at 46.5 cents on Aug 26.
