$143m Kiwi offer opens next week

Kiwi Income Property Trust will next week open a funding offer to raise $143 million for its $538 million Sylvia Park development in Auckland.

On Tuesday, it will go to the market with a mandatory convertible notes offer to raise the money for the first stage of the park, where Multiplex Constructions (NZ) is putting up a large shopping centre.

The deal has angered some unitholders, including powerful institutional investors, who believe it may be too risky.

The new financing offer will be lead-managed by Goldman Sachs JB Were and will close on July 1.

The $143 million must stay with Kiwi until June 2010, when the notes will convert to Kiwi units.

The note offer is in two tranches - a primary offer of $110 million and an entitlement offer of up to $33 million. The entitlement offer is for a renounceable rights issue of one note for every 23 ordinary units held already.

The investment will be fixed for five years at 8 per cent or the applicable five-year swap rate, plus a 1.3 per cent margin.

NZX yesterday granted Kiwi and its manager a waiver from listing rules so it is not required to extend the offer to overseas unit holders.

The offer investment statement and prospectus will be unavailable until next week.