Summerset Group plans to sell up to $100 million of seven-year, fixed-rate bonds as the retirement village operator and developer cuts it reliance on bank debt. 

The bond offer for $75 million with the ability to accept oversubscriptions of $25 million is expected to open the week of Sept. 10 and Summerset said it would provide more details at the time. The notes are expected to be listed on the NZX debt market. 

Summerset chair Rob Campbell said he is pleased the firm is considering another retail bond issue after raising $100 million in June 2017, with an oversubscription of 33.3 percent. The interest rate for those bonds – which will mature in July 2023 – was set at 4.78 percent per annum. They last traded at a yield of 3.7 percent. 

“Another bond issue allows Summerset to continue to diversify funding sources and tenor, and provide funding certainty for future years,” said Campbell. 

Wellington-based Summerset had net debt of $364.5 million as at June 30, with $279.3 million drawn from its $500 million banking facility. The bank debt matures in two tranches: August 2020 and March 2022. 

Stockbroking firm Chris Lee & Partners said in a note to clients that current market conditions indicate the latest Summerset offer may be set around 4.2 percent. 

Summerset appointed ANZ Bank New Zealand as arranger, and ANZ, First NZ Capital Securities, Forsyth Barr and Hobson Wealth Partners as joint lead managers.

The bonds will be unsubordinated obligations of Summerset, and will have the benefit of a guarantee and security package provided by the Summerset guaranteeing group, it said. 

Summerset shares last traded at $7.68 and have lifted 7.9 percent this year.

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