Monday 24 April 2017 by FIIG Research Company updates

Company Updates - Axsesstoday, Capitol Health, IPG, StockCo

Axsesstoday to issue $25m (with oversubscriptions up to $30m) Series 2 Fixed Rate Notes

Axsesstoday provides commercial equipment and vehicle finance to small and medium businesses via a distribution channel of retailers and referrers. Axsess is seeking to raise $25-30m in Series 2 Medium Term Notes to pay down existing senior secured debt to allow for ongoing asset origination.

The Notes offer a fixed return (payable quarterly) of 7.50% p.a. until 22 June 2020 and stepping up to 8.00% p.a. if not called on 22 June October 2020. The Notes are callable at the Issuer’s option on each interest payment date from Oct-18 at $102, from Oct-19 at $101.50.

FIIG is the Sole Lead Arranger for this transaction and the Notes are available to Wholesale Clients only (pursuant to the Corporations Act 2001 (Cwlth)), with an initial minimum subscription of A$50,000 and in increments of A$1,000 thereafter. Please contact you FIIG representative for more information.

Capitol Health - debt reduction significantly improves credit profile 

While 1H17 results were weak, industry dynamics are steadily improving. During April, Capitol raised $38.5m in equity for debt reduction. Capitol’s net debt position has improved significantly and the company is targeting further deleverage. Please refer here for more information.

GPT Wholesale Office Fund new DirectBond

The Fund is an open ended unlisted property fund that provides wholesale investors with exposure to office assets, located in Australia's major office markets. At 31 December 2016, the Fund had ownership interests in 18 office assets with a value of $6.6bn. The Fund was established in 2006 and is managed by The GPT Group (GPT). GPT is required to hold a minimum 15% and maximum 49.9% ownership interest in the Fund.

The GPT Wholesale Office Fund No.1 senior unsecured 4.52% fixed rate bond matures on 22 February 2027. It is Australian dollar denominated and available to wholesale investors only in minimum parcels of AUD10,000.

For more information please see the GPT Wholesale Office Fund 2027 bond factsheet 

Hyundai Capital Services new DirectBond

Hyundai Capital Services Inc. (HCS) is a joint venture between Hyundai Motor Company (HMC) and General Electric Capital Corporation (GECC). It is a leading financial services company in Korea. Its principal business areas are automotive finance, automotive leasing and personal loans. 

The Hyundai Capital Services senior secured 3.50% fixed rate bond, maturing in March 2022, is Australian dollar denominated and available to wholesale investors only in minimum parcels of AUD10,000, with denominations of AUD5,000 thereafter.

For more information please see the Hyundai Capital Services 2022 bond factsheet.

IPG record a strong first half 

IPG has recorded a strong first half FY17 with EBITDA increasing 42.6% to $14.4m. As the company is assessing a potential sale of the business, the bonds will likely continue to trade at around the call price, as they may be repaid as part of such a transaction. Please refer here for more information.

StockCo 1H17 results – Strong growth offset by higher than expected costs

Agricultural financier StockCo achieved above budget loan book growth. The growth has been due to the enhanced distribution network via the Elders partnership and has been aided by favourable climatic conditions and strong livestock prices.  Please refer here for more information.

Reports suggest Kindred may be seeking interest from potential buyers

Bloomberg has reported, citing a DealReporter article, that Kindred is seeking interest from potential buyers for the sale of the entire company, as well being in late stages for the sale of its nursing unit. The article noted: 

a) KND is in "late-stage" talks with multiple buyers for its nursing facility unit, with a sale likely to happen by mid-June, and 

b) KND has received several inquiries for the sale of the company in the past two years.

We note the following:

  • The sale of the nursing unit was first disclosed in November 2016, when it highlighted intention to exit the nursing centres and focus on its core strengths of home health and hospice (Kindred at Home). Whilst the planned disposal of the nursing centres is positive for the quality of the overall revenue mix, it is likely have little near-term impact on leverage levels. This is offset somewhat by the operating, rental and capital expense savings arising from the nursing centres disposal, currently estimated by management to be around USD190-220m per year.
  • There is a 101 change of control provision however the bonds are trading above this.
  • Callable with minimum 30 days’ notice, in full or part, on and any time after the following dates:
    15-January-2018 @ USD106.563
    15-January-2019 @ USD104.375
    15-January-2020 @ USD102.188
    15-January-2021 @ USD100.000