Turnstar reviews $30m bond on stronger Pula
Brian Benza | Thursday November 17, 2016 18:00
In a statement to shareholders, Turnstar said in light of the significantly stronger pula, it is undertaking a review of the forecast financial information, on which the conversion price was based, in order to finalise an appropriate conversion price for the convertible bonds. “As part of this exercise, Turnstar is also updating the forecast financial information for current trading conditions in Botswana and Tanzania in light of the economic and legislative changes in these respective countries which affect the operations of the company. The outcome of the review process is likely to be an amendment to the target conversion price and terms for the convertible bonds,” said the company.
From a peak of about P11.6 to a dollar, the pula has strengthened in the past months and ended yesterday’s trading at P10.75 to the greenback.
Turnstar intends to issue up to $30 million of seven-year US dollar denominated compulsorily convertible bonds to be converted to Turnstar linked units on maturity at a pre-determined price in the range of P5.00 to P5.40. The company says it has engaged the Botswana Stock Exchange regarding the proposed changes and an announcement regarding the revised terms and timing will be communicated to the market in due course once this process is complete.
Proceeds from the bond will predominantly be used to fund Turnstar’s expansion plans at Mlimani City in Tanzania.
The Mlimani City expansion is estimated to cost $45 million and will generate an attractive development yield of 13% in addition to net asset value uplift going forward.
The development of the mall will include the addition of 15,997 square metres of new retail office and 420 square metres conference space, up to 342 bays of basement parking and a hotel. A botanical garden will also be developed to complete the attraction of the Mlimani City node.
The project is expected to be completed in 2017. In Botswana, the group recently completed the sale of its Fairgrounds Office Park property to Botswana Life Insurance Limited for P129 million.
The value of the property was P121.5 million and the profit attributable to the sale is P7.5 million.
The disposal resulted in a decrease of 8.58% in the group’s net assets and a 1.53 thebe decrease in the net value per share. The proceeds of the sale will be reinvested in further yield-enhancing opportunities.
On the other hand, Turnstar’s P250 million refurbishment and expansion of the Game City Mall which is expected to enhance the quality of its property portfolio as well as its underlying net asset value, is expected to be completed this year.