Fletcher Building's boss says he is not keen to 'get greedy' on Gib prices this year, while Ryman Healthcare's boss explains what led to its surprise $900m capital raise.
Video / NZ Herald
The market regulator is assessing Ryman Healthcare’s $902 million capital raise and whether it withheld information about its debt situation from investors.
“NZ RegCo is assessing Ryman’s capital raising and the repayment of its USPP notes, in the context of its financial covenants,” a New Zealand Stock Exchange regulator spokesmansaid in a statement.
Ryman last week announced it was raising $902m to pay down all $709m of US private placement (USPP) debt, the $134m costs associated with terminating the debt agreement early and $16m of negative cost adjustments.
Ryman Healthcare chief executive Richard Umbers told Markets with Madison last week the company “certainly hadn’t breached any” debt covenants, but forward modelling showed it was an increased risk so changes were made.
“We certainly weren’t happy with that level of risk into next year,” he said.
“So we did have discussions with the various lenders we had within the business, that included the USPP and also ITL (institutional term loan) and the local banks. In association with them, we made some adjustments to the covenants.”
An NZX guidance note explaining what listed companies must disclose to the market said if a debt covenant was set to be breached, investors must be told.
“If an issuer becomes aware that it will breach a financial covenant ... the issuer must disclose this information immediately, regardless of the fact that the breach has not actually yet occurred.”
NZRegCo pointed to the guidance material, in reference to Ryman’s situation.
“NZ RegCo notes the exchange has published guidance relating to financial covenants set out in the guidance note on continuous disclosure, which focuses on prospective and actual breaches of a financial covenant and the factors relevant to the assessment of whether that is material information for an issuer.
“NZ RegCo has no further comment at this time.”
Ryman Healthcare's $120 million Birkenhead village, under construction in 2020.
Ahead of its capital raise, Umbers would not tell the Herald if the company had breached its debt covenants or received warnings from its lenders.
If the raise was successful, Ryman’s gearing ratio would drop to 34 per cent from 45 per cent.
Its debt book would total $2.3 billion - $1.8b in bank loans, $285m of an ITL and $150m of retail bonds.
The average tenure to repay its existing $3b of debt was 4.5 years. After paying the US debt down early it would reduce the repayment tenure to 3.2 years.
