Austar Proposes
Refinancing Arrangements
Media
Release
AUSTAR capitalises on improved financial performance with revised debt arrangements Austar United Communications Ltd, (AUSTAR), today announced its proposed refinancing arrangements in light of the Company’s recent financial and operational improvements. The Company is proposing a hybrid financing approach with a significant reduction in the amount of its senior debt. The refinancing will combine a revised senior debt facility of up to $290 million with an offer of up to $100 million of hybrid debt security know as ‘STARS’, for Subordinated Transferable Adjustable Redeemable Securities.
Alongside the senior debt facility, AUSTAR proposes to issue up to one million STARS at an issue price of $100 each to raise up to $100 million, with the ability to accept up to an additional $15 million in oversubscriptions. STARS will pay cumulative interest quarterly in arrears at a rate equal to the 90 day bank bill swap rate plus an indicative margin of between 3.75% to 4.00%, to be determined by a bookbuild. The minimum investment amount is 50 STARS, or $5,000.
The Company will apply for STARS to be listed on the ASX. While AUSTAR employees and existing shareholders resident in Australia will be given priority in the event of excess demand, the offer will also be available to the Australian general public, although no-one is guaranteed to be allocated any STARS.
AUSTAR recently appointed Deutsche Bank and JP Morgan as Joint Lead Managers to assist in seeking a more flexible funding structure to support its future growth plans. UBS is acting as the Company’s financial advisers. ANZ Securities Limited, Deutsche Securities Australia Limited, Ord Minnett Limited and UBS Private Clients Australia Limited have been appointed Co-Managers of the Offer.
The Chairman of AUSTAR, Mr Bill Ferris, said that the Offer
indicates a maturing in AUSTAR’s business profile. “This proposed
refinancing is a direct reflection of the fact that AUSTAR has made significant
improvements in the last two years, and we’re pleased to be able to
convert that success into an opportunity for investors. At the same time,
the Company will be able to move past the restrictive covenants that have
been a feature of its debt arrangements over the past few years. Financing
flexibility is particularly important to AUSTAR given our growth
potential and the new opportunities facing subscription television.”
AUSTAR CEO Mr John Porter said that the company is in its strongest position yet, and is ready to capitalise on its recent and forecast growth. “AUSTAR is a different company today to the one which signed up to the current debt structure. Our Prospectus forecasts $96.3 million in EBITDA for the year ended December 2004, and a further $54.7 million in EBITDA for the 6 months to June 2005. We have turned the corner and among other substantial financial and operational gains, are now operating free cash-flow positive. It’s time now to re-strike our arrangements with a smaller, more streamlined bank syndicate, more appropriate covenants, and the opportunity for the broader market to participate in the future of AUSTAR.”
The ASX has granted the Company a waiver from listing rule 10.11 that allows all of the directors of the Company and their related parties to participate in the issue of the STARS, provided that the extent of the participation of all of them (and their associates) combined is limited to that number of STARS having a face value of no more than 0.2% of the total issue of STARS, being $200,000 (based on an offer size of $100 million), without obtaining shareholder approval for the issue.
A prospectus for the offer of STARS was lodged with ASIC today. Anyone wishing to apply for STARS will need to complete the Application form that accompanies the prospectus. The STARS Offer is expected to open on Wednesday, September 8, 2004, and is expected to close Tuesday, October 5, 2004. Investors who wish to receive a prospectus or to make inquiries regarding STARS can call the STARS Infoline on 1300 726 231 from 8.30am to 5.00pm, Monday to Friday.
A briefing for investors and the media will take place today, 30 August 2004, at 12pm, at the ASX Exchange Square, the Australian Stock Exchange, 20 Bridge St Sydney. The briefing will be webcast live, and available for viewing at:
http://events.genesysrichmedia.com/austar/2004/08/30/