12 July 2016
Onterran Limited (ASX:OTR) ASX Announcement
Acquisition of Couran Cove Resort assets, Capital Raise and Extraordinary General MeetingOnterran Limited ("Onterran" or "Company") is pleased to make the following announcement about:
the acquisition of certain assets at the Couran Cove Resort, South Stradbroke Island, QLD;
the proposed issuance of redeemable convertible preference shares ("RCPS") to fund the acquisitions;
an Extraordinary General Meeting ("EGM") to be held on 15 August 2016 for shareholders to approve, among other things, the issuance of the RCPS and an 8 for 1 share consolidation; and
a general business trading update
Following a detailed due diligence process, Onterran has agreed to acquire various assets at the Couran Cove Resort. These acquisitions will enable Onterran to benefit from substantial development potential with more than 220 approved houses and lodges as well as benefit from the upside in approximately 105 existing apartments. Onterran plans to develop the 220 approved houses and sell the 105 existing apartments, which are expected to generate revenue of over $95 million in the next 4 years. In addition to existing apartments and approved development land, there may be further development opportunities that will be investigated over time. These opportunities relate to large leasehold parcels of land that form part of the acquisition.
To fund the acquisition of the various assets, undertake the renovation and sale program on the 105 existing apartments and commence development of the land, Onterran is raising up to $21.5 million through the issuance of redeemable convertible preference shares ("RCPS"). Onterran is pleased to announce that it has already received pledges sufficient to complete the acquisition of the Couran Cove Assets and is confident of being able to raise the full $21.5 million.
The table below sets out the approximate uses of funds based on minimum and full RCPS subscriptions being received:
Use of funds from the RCPS capital raise | Minimum Subscription ($16.5 million) | Fully subscribed ($21.5 million) |
To acquire Couran Cove Resort Assets | $14,000,000 - $15,000,000 | $14,000,000 - $15,000,000 |
Expenses of the offer of the RCPS | $800,000 | $800,000 |
Costs for the development of the Couran Cove Assets and provision of general working capital | $700,000 - $1,700,000 | $5,700,000 - $6,700,000 |
A$16,500,000 | A$21,500,000 |
Onterran Executive Chairman Lachlan McIntosh said, "the Board of Onterran is excited about the acquisition of the Couran Cove Resort assets as we consider there is significant upside potential in the acquired assets, and the development land provides the platform for the company's next four to seven
years' work. The development potential of Couran Cove is vast and we expect it to be challenging but also very rewarding."
Further details about the Couran Cove Resort assets, the RCPS and EGM follow.
Couran Cove Resort assets being acquiredThrough wholly-owned subsidiaries Onterran will acquire the following Couran Cove Resort assets:
approximately 105* existing apartments;
3 developments lots with development approval for over 220 houses and lodges;
a number of commercial buildings; and
significant possible future leasehold development land
(collectively, the "Acquisitions"). An updated presentation about these assets is enclosed in this announcement.
*Conditional agreements have been reached with multiple vendors of existing apartments. Contracts are in the process of being completed with the final number of apartments to be acquired contingent on the number of contracts ultimately executed.
Redeemable Convertible Preference Share issuanceOnterran will fund the Acquisitions through the issue of up to $21.5 million redeemable convertible preference shares ("RCPS") the key details of which follow and are subject to shareholder approval at Onterran's Extraordinary General Meeting to be held on 15 August 2016:
Issue date: | End of August 2016 |
Maturity date: | 5 years from Issue date |
Issue price: | $0.55 (following an 8 for 1 share consolidation) |
Number of RCPS to be issued: | 39,090,909 |
Conversion price: | $0.55 (1 RCPS is convertible into 1 OTR ordinary share) |
Conversion term: | At any time between Issue Date and Maturity Date |
Dividend: | 8% fully-franked, cumulative but not compounding, payable semi- annually. Arrears accrue interest at 8% p.a. and can be satisfied by payment of cash or issue of shares at a 5% discount to the 5-day VWAP at date of conversion or maturity |
Security: | RCPS holders will receive security over approximately 105 existing apartments ("Secured Apartments") |
Redemption: | By Onterran:
By RCPS holders: Mandatorily: |
Onterran will hold an EGM on 15 August 2016 for shareholders to approve, among other things, the issuance of the RCPS and an 8 for 1 share consolidation. The notice of EGM, which will be lodged with the ASX by separate announcement, provides a more detailed explanation of the Couran Cove Resort assets being acquired and also the RCPS.
General business trading updateThe current businesses have continued to operate in a difficult environment with a mixture of rising prices in Queensland and declining regional work in Western Australia. This, along with the costs of completing a small number of loss making contracts that were on hand at the time of acquisition of Bloomer Constructions, will lead to the group recording a small loss for FY 2016.
In Queensland, pricing has to an extent stabilised in the last two months and Bloomer Constructions expects a much stronger performance in FY 2017. In Western Australia, the McGrath Homes business continues to work on major contracts previously announced that have underpinned its FY 2016 result.
With the acquisition of the Couran Cove Resort assets, the first step is being taken for Onterran to develop significantly more of its own product and hence be less beholden to the ebbs and flows of pricing. This acquisition is expected to underpin FY 2017 to 2020 earnings and provide a base for further acquisitions.
For further information contact: Lachlan McIntosh
Executive Chairman (07) 3668 0660
Onterran's Acquisition of Assets at Couran Cove Island Resort
Couran Cove Island Resort is a 4-star Resort that was completed in 1998 on South Stradbroke Island, in Queensland.
Over $300 million has been spent on infrastructure and construction of the Resort.
There are 352 apartments and houses in total at Couran Cove.
Couran Cove has full resort facilities including spa, beach club, restaurants, pools and a sporting area.
Onterran is to acquire 108 of the 352 apartments and houses, all of which are located on the waterfront of a man-made lagoon or the marina.
An extra 220 apartments and houses have been approved to be built through a Development Application.
Onterran is also acquiring significant leasehold land, held long term with possible development potential.
Onterran Limited published this content on 12 July 2016 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 12 July 2016 12:18:05 UTC.
Original documenthttp://www.onterran.com.au/Acquisition of Couran Cove Resort.pdf
Public permalinkhttp://www.publicnow.com/view/71AC7A7889FEC45F6EAF3B07508B7ED262AAA430