As anyone who has played the standard British version of the board game Monopoly knows, property in Mayfair is very expensive, which accounts for why British Land is tapping the bond market to pay for its recent acquisition of the Clarges Estate overlooking Green Park.
The company is offering £300m of senior, unsecured convertible bonds due 2017, although depending on demand, the size of the offering may be increased by up to £100m.
That will be more than enough to pay for the £129.6m acquisition of the Clarges estate in prestigious Mayfair, with plenty left over to repay existing borrowings relating to other recent acquisitions, as well as to support development spending.
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The bonds will be issued at par and are expected to carry a coupon (interest rate) of between 1.375% and 1.875% per annum payable semi-annually in arrears. Subject to the satisfaction of certain conditions, the bonds will be convertible into ordinary shares of British Land, with the initial conversion price expected to be set at a premium of between 27.5% and 32.5% above the volume weighted average price of the Shares between the launch of the bond offering and the decision on pricing.
If fully converted, the bonds would represent somewhere between 5% and 7% of the company's issued share capital. Under the terms of the bond issue the company will have the right to elect to settle any conversion entirely in shares, cash or a combination of shares and cash.
The final terms of the bonds are expected to be announced on Tuesday, September 4th, and settlement is expected to take place on or about 10th September 2012.
JH
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