Diversified developer Lendlease taps investors for $1.15b
Diversified developer Lendlease is tapping investors for $1.15 billion to shore up its balance sheet and protect its development pipeline from the ravages of the coronavirus pandemic.
Shortly after entering a trading halt on Tuesday, Lendlease said it would undertake a fully underwritten institutional placement to raise $950 million and a non-underwritten securities purchase plan for a further $200 million.
The funds will support Lendlease’s $112 billion global development pipeline.Credit:
“This equity raising, coupled with the actions we have already taken, will strengthen the group’s balance sheet position during this uncertain economic environment with available liquidity increased to $3.95 billion,” chief executive Steve McCann said.
The fresh funds would support Lendlease’s $112 billion global development pipeline and provide flexibility for further investments, he said.
The $950 million placement would be offered to institutional investors at $9.80 per security, a 8.2 per cent discount to the last closing price of $10.68 on April 27.
Mr McCann said Lendlease’s developments were going ahead by complying with social distancing and safety standards.
“Where necessary we have implemented safety pauses while we work through the required changes, such as we have done in London,” he said.
Mr McCann added that shutdowns on project had been mandated in Singapore, Kuala Lumpur, Milan, New York and Boston by relevant authorities, with sites at these locations slowly progressing towards restarts.
The halt to construction across the globe on major Lendlease projects is likely to further weigh on the company's bottom line after it reported a 13.2 per cent decline in after-tax profit for the six months to December in February.
The group's profit for 2020 financial year is dependent on some developments that may be delayed.
"Reduced productivity in the construction segment is expected to have a short-term impact on core profit and the impact of any revaluations on the investment segment is currently uncertain," Mr McCann said.
Just before the full impact of the coronavirus hit the global community in February this year, Lendlease was reassuring investors that its troubled Melbourne Metro Rail project was unlikely to cost them more money.
The company said it now expects to retain the Melbourne Metro project and is "continuing to work with the government on a confidential basis to resolve issues in relation to scope and costs of the project."
It added the expected costs of exiting its troubled engineering and services businesses would remain unchanged at between $450 million and $550 million, subject to any unknown impacts arising from COVID-19.