AX Real Estate plc - Upcoming IPO & Bond Issue

On 17 November 2021, AX Real Estate plc published a slideshow in relation to a proposed issuance of:

  • 33,333,333 ordinary ‘A’ shares (subject to an over-allotment option of up to a further 16,666,667 ordinary ‘A’ shares) at €0.60 each with a total value of up to €30 million.
  • €40 million in unsecured bonds to be issued at par (100%) at a coupon of 3.5% and redeemable in 2032.

AX Real Estate is expecting to obtain regulatory approval of its prospectus in relation to this combined offer by 6 December 2021.

AX Real Estate plc is a subsidiary of AX Group plc and owns real estate for lease in Malta having a total value of more than €230 million. The property portfolio comprises of hotels; residential and commercial units; office space; warehouses; and a healthcare complex. The vast majority of the company’s property portfolio is leased out for the long term to AX Group plc and related parties.

The salient features of the combined offer are as follows:

Amount of Shares on Offer:

Up to 50 million shares

Share Offer Price:

€0.60 per share

Dividend Policy:

AX Real Estate intends to distribute the majority of the annual distributable profits provided that a minimum balance of €1 million in cash is retained in the business. Nonetheless, the company is committing to a guaranteed net dividend yield of 4% per annum in the first two years. Moreover, the company’s projections show a sustainable and strong dividend distribution higher than the initial two years once the redevelopment of the AX Seashells Resort at Suncrest (Qawra) and the Verdala Hotel (Rabat, Malta) are completed by the end of 2023.

Bond Amount on Offer:

€40 million (nominal)

Bond Issue Price:

100% (par)

Bond Coupon:

3.50%

Bond Maturity:

2032

Reasons for the Combined Offer:

The proceeds to be raised from the IPO and the bond issue will be used for the following purposes:

  • €25.6 million for the partial financing of the redevelopment of the AX Seashells Resort at Suncrest (Qawra).
  • €10 million for the partial financing of the development of the Verdala Hotel (Rabat, Malta) and the renovation of the Virtu Heights apartments.
  • €14.4 million for general corporate funding purposes.
  • €8.7 million (or €18.5 million in case the over-allotment option in relation to the IPO is exercised) for the partial repayment of existing loans with AX Group plc.

Terms of Participation:

AX Real Estate has set out the following terms that prospective investors must observe:

  • The minimum subscription amount for ordinary ‘A’ shares is 5,000 shares (equivalent to €3,000). However, prospective investors participating in the equity IPO for an amount in excess of 200,000 ordinary ‘A’ shares (equivalent to €120,000) will benefit from a discount of 10% on the offer price (i.e. participation at €0.54 per ordinary ‘A’ share instead of the offer price of €0.60 per ordinary ‘A’ share).
  • The minimum subscription amount for the bonds is €2,000 (nominal). However, prospective investors are guaranteed a minimum allocation of €6,000 (nominal).
  • Bond issue applications unaccompanied by equity applications will only be considered if the bond application is for a minimum of €250,000 (nominal).
  • Preference in allocation will be given to current bondholders of AX Group plc and AX Investments plc.

Expected Opening of Offer Period:

10 January 2022

Expected Listing Date:

4 February 2022

Download:

AX Real Estate plc – Investor Presentation

AX Real Estate plc – Prospectus dated 6 December 2021

 

Disclaimer:

Investors wishing to acquire Shares and/or the Bonds should read the Prospectus once this is published before making any investment decision in order to fully understand the potential risks and rewards associated with such investments. Prospective investors are urged to consult their financial advisers as to the suitability or otherwise of acquiring such Shares and/or Bonds. The value of the investment and the income therefrom may go down as well as up and investors may lose some or all of the money invested.

This advertisement has been issued by Rizzo, Farrugia & Co. (Stockbrokers) Limited, a company licensed to undertake investment services in Malta by the MFSA under the Investment Services Act, Cap. 370 of the Laws of Malta, and having its registered address at Airways House, Fourth Floor, High Street, Sliema SLM 1551, Malta.