Peet Limited · ASX:PPC
Peet — Merger or Acquisition (April 2013)
45 slides from Peet's merger presentation, Apr 10, 2013
Slide 1: Acquisition and equity raising
For personal use only Lightsview, SA Burns Beach, WA Acquisition and equity raising A il 2013 April
Slide 2: Disclaimer
Disclaimer The following disclaimer applies to this presentation and to any information provided regarding the information contained in this presentation (Information). You are advised to read this disclaimer carefully before reading or making any other use of this presentation or the Information. I
Slide 3: Table of contents
For personal use only Table of contents Executive summary 4 Peet – 3QFY13 update 5 Strategic rationale and impact on Peet 6 Overview of CIC 15 Equity raising 22 Appendices CIC project overviews 26 Bid conditions and placement terms 33 Key risks 40 Financial assumptions p 44 Acquisition and equity ra
Slide 4: Executive summary
Executive summary » Takeover offer for CIC Australia Limited (CIC), a listed residential developer with major projects in NSW, ACT, SA and NT For personal use only » Peet has agreed to acquire a 19.9% stake in CIC, either through the bid, or failing that, through direct Acquisition acquisition, from
Slide 5: Peet - 3QFY13 update
Peet - 3QFY13 update Highlights FY13 sales – by lots(1) For personal use only 1,800 » Strong sales results in WA being recorded 1,606 1,500 » Victorian market has stabilised 643 1,200 963 » Working capital to deliver Peet’s existing projects, 900 reduce debt and invest in new opportunities 536 600 4
Slide 6: Strategic rationale and impact on Peet
For personal use only Shorehaven at Alkimos, WA Aston, Craigieburn, Vic Str te ic rrationale Strategic ti n le and nd imp impact ct onn Peet
Slide 7: Acquisition background and structure
Acquisition background and structure » The current opportunity arose as a result of GPG seeking to exit its 73% stake in CIC For personal use only » GPG announced d iin F Feb b 2011 it its iintention t ti tto sellll non-core stakes t k iin lilisted t d investments i t t » Peet has undertaken a due d
Slide 8: CIC board recommendation
CIC board recommendation » A majority of CIC’s board and a majority of CIC’s independent directors have recommended For personal use only Peet’s offer, subject to there being no superior proposal » Colin Alexander (Chief Executive Officer and Managing Director), while not making a recommendation, ha
Slide 9: Strategic rationale for the CIC acquisition
Strategic rationale for the CIC acquisition » High quality, strategic projects with over 500(1) exchanged contracts on hand worth approximately $148m(1) For personal use only » CIC being acquired at a 13% discount to net asset value as at 31 December 2012 » All of CIC’s projects are currently develo
Slide 10: Consistent with Peet business model
Consistent with Peet business model » Most projects are held in capital efficient joint venture and co-investment structures, where CIC generally For personal use only CIC landbank at 31 March 2013(1) g receives management and development p fees » Established JV partners in place with opportunity to
Slide 11: Diversification of Peet landbank and sales
Diversification of Peet landbank and sales » Diversifies Peet into new markets of ACT/NSW, SA and NT For personal use only » Postt completion P l ti off Crace, C CIC exposure will ill then th consist i t off one major j residential id ti l estate t t in i each of ACT/NSW, SA and NT » Ability to leve
Slide 12: Financial impact on Peet
Financial impact on Peet(1) Financial benefits For personal use only » Expected accretion to FY14 operating EPS of greater than 10%(2) » Neutral to FY13 operating EPS, with FY13 pro forma operating NPAT of $12-15m(2), pro forma for transaction occurring g on 1 Mayy 2013 » Operating earnings excludes
Slide 13: Summary pro forma balance sheet
Summary pro forma balance sheet(1) Peet pro forma Peet pro forma for for full equity For personal use only Unconditional equity raising unconditional Conditional raising and Peett P andd other th placement and equity CIC Other 100% CIC BALANCE SHEET ($m) 31 Dec 12 adjustments(2) 19.9% CIC stake rais
Slide 14: Impact if Peet acquires less than 100% of CIC
Impact if Peet acquires less than 100% of CIC Impact if Peet acquires greater than 50% Assuming takeover bid not successful, For personal use only of CIC, however does not acquire greater acquisition q of 19.9% of CIC onlyy than 90% » Peet has a minimum acceptance condition of 50.1% » If the takeove
Slide 15: Overview of CIC
For personal use only Googong, NSW Lightsview, SA Overview of CIC
Slide 16: Overview of CIC
Overview of CIC » CIC Australia is a listed residential development Geographic diversification of land bank(1) For personal use only company, headquartered in Canberra » CIC’s business comprises the following key projects » Crace (ACT) – residential land subdivision ACT SA 308 » Googong (NSW) – resi
Slide 17: History and background of CIC
History and background of CIC » Commenced operations in 1986 with a major development near Queanbeyan (NSW) For personal use only called Jerrabomberra Park, under the name Jerrabomberra Estates Limited » CIC expanded from NSW into the ACT area before diversifying into SA and the NT » Currently has o
Slide 18: Overview of projects
Overview of projects » All projects, other than Quayside, contribute to profit immediately » Significant presales in place driving operating cash flows For personal use only Approx lots Approx. Approx lots Approx. Profit contribution Original remaining to remaining to Lots $m Project Ownership yield
Slide 19: CIC management structure
CIC management structure » Highly experienced management team, with 66 employees For personal use only » CIC generally undertakes development management and project sales internally » Average tenure of 11 years for senior management team » Each project has a dedicated team to undertake development m
Slide 20: CIC balance sheet
CIC balance sheet » $114m book value of projects comprising BALANCE SHEET ($m) 31 Dec 12 For personal use only Assets » $72 held $72m h ld through h h joint j i ventures; and d Cash 4.0 Receivables 20.4 » $42m held on balance sheet Inventories, investments accounted for using the equity 124.0 method
Slide 21: CIC debt facility summary
CIC debt facility summary » Significant headroom under all project facilities For personal use only CIC(1) P id Provider Drawn(2) D C Current t ffacility ilit lilimit it E i Expiry MOF Facility St George $26.9m $37m 1 July 2014 Quayside Construction Facility St George $4.1m $34m 31 January 2015 Jan
Slide 22: Equity Raising
For personal use only Flagstone, Qld Equity q y RRaisingg
Slide 23: Equity Raising
Equity Raising » Equity to be raised from placements of $124m For personal use only » q $83m to fund the acquisition, including g transaction costs » $41m to support the repayment of the CIC multi-option facility, if appropriate, and fund working capital and project delivery » Placements comprise »
Slide 24: Timetable
Timetable Acquisition and unconditional placement For personal use only Key Event Date1 Announcement of acquisition, Equity Raising and trading halt Wednesday, 10 April 2013 Shares recommence trading Thursday, 11 April 2013 Despatch bidder’s statement, takeover offer opens Tuesday, 16 April 2013 Set
Slide 25: Appendices
For personal use only Warner Lakes, Qld Vantage, Gladstone , Qld Appendices
Slide 26: CIC project overviews
For personal use only Quayside, ACT Lightsview, SA CIC pr project ject overviews verviews
Slide 27: Googong, NSW (50% CIC / 50% Mirvac)
Googong, NSW (50% CIC / 50% Mirvac) Project overview For personal use only » Googong is located approximately 16 km from Canberra and 7 km south of Queanbeyan » Project size is 780 hectares and is forecast to be undertaken over a 20 to 25 year timeframe » Mirvac became CIC’s jjoint venture partner p
Slide 28: Googong, NSW (50% CIC / 50% Mirvac)
Googong, NSW (50% CIC / 50% Mirvac) Project overview For personal use only » CIC recently established a sales office in the local Jerrabomberra shopping centre » Construction of local community facility, Club Googong, is currently underway which will house the sales office when complete » Project pr
Slide 29: Crace, ACT (Crace Developments 50% / LDA 50%)
Crace, ACT (Crace Developments 50% / LDA 50%) Project overview For personal use only » The Crace Estate is located in the northern Canberra region of Gungahlin, Gungahlin approximately 11km north of the Canberra CBD » Crace is a mature project with over 1,200 lots or 83% of the project sold to 31 De
Slide 30: Lightsview, SA (50% CIC / 50% RSA)
Lightsview, SA (50% CIC / 50% RSA) Project overview For personal use only » Lightsview is a joint venture with the South Australian Government’ss Renewal SA (RSA) Government » Situated 8km from the Adelaide CBD » Includes a town centre, p parklands and communityy facilities » The project has a 15% a
Slide 31: The Heights, NT (50% CIC / 50% CDU)
The Heights, NT (50% CIC / 50% CDU) Project overview For personal use only » Located approximately 20 minutes east of the Darwin CBD at Durack » The site was rezoned to provide a new residential precinct as a part of the NT Government’s Housing The Territory initiative » Being developed by CIC under
Slide 32: Quayside, ACT (100% CIC)
Quayside, ACT (100% CIC) Project overview For personal use only » Quayside Kingston Harbour is in close proximity to Parliamentary Triangle Triangle, and the cafe culture of Kingston and Manuka in Canberra » CIC acquired the 4,389sqm site in 2007 after the land was released for development by the Te
Slide 33: Bid conditions and placement terms
For personal use only Greenvale, Vic Shorehaven, Alkimos, WA BBid conditions and pplacement terms
Slide 34: Bid conditions
Bid conditions Capitalised words used on this page and not defined in this presentation will have the meaning given to (f) (Target Financial Arrangements) during the period commencing on the Announcement Date and them in the Bid Implementation Agreement between the Bidder and the Target. before the
Slide 35: Bid conditions (cont.)
Bid conditions (cont.) (h) (no persons exercising rights under certain agreements or instruments) after the (l) (CBA Facility) before the end of the Offer Period, a valid, binding and enforceable agreement for Announcement Date and before the end of the Offer Period, no person: the CBA Facility is e
Slide 36: Bid conditions (cont.)
Bid conditions (cont.) in each case after the date of this agreement, (each of (a), (b) and (c), a specified event (“Specified 2012 Final Dividend means the dividend announced by Target on 28 February 2013 as a final fully Event”)) which, whether individually or when aggregated with all such events,
Slide 37: Bid conditions (cont.)
Bid conditions (cont.) (c) Target or a Subsidiary of Target (which is not a directly or indirectly wholly owned Subsidiary): (i) a disposal, agreement to dispose, charge or agreement to charge, by a JV, of the whole or a substantial part of its business or property; (i) enters into a buy-back agreem
Slide 38: Placement termination events
Placement termination events The Underwriter may terminate its unperformed obligations under the Placement Agreement on (iii) circumstances existing which would permit a presumption of insolvency in relation to the occurrence of a termination event at any time on or prior to the issue of the Conditi
Slide 39: Placement termination events (cont.)
Placement termination events (cont.) (m) (Compliance) a contravention by the Issuer of any provision of its constitution, the (u) (Banking moratorium) a general moratorium on commercial banking activities in Australia is Corporations Act or any requirement order or request made by or on behalf of AS
Slide 40: Key risks
For personal use only Cardinia Lakes, Vic Burns Beach, WA Keyy risks
Slide 41: Key Risks
Key Risks Introduction New Accounting Standard Future residential property market conditions A number of risks and uncertainties, which are both A new accounting standard, AASB 10 Consolidation of Peet derives earnings from both its owned developments specific to Peet and/or CIC and of a more genera
Slide 42: Key Risks (cont.)
Key Risks (cont.) Purchasers’ settlement Breach of financial covenants Financing of managed funds and syndicates A failure of a significant portion of purchasers to settle on As at the date of this presentation, both Peet and CIC Peet’s managed funds and syndicates utilise debt to fund major develop
Slide 43: Key Risks (cont.)
Key Risks (cont.) Acquisitions and joint ventures Climate change and climatic conditions Insurance Peet may make strategic acquisitions of businesses and Peet’s and/or CIC’s failure to adequately respond to the Property developers and constructors generally enter into joint ventures as part of its g
Slide 44: Financial assumptions
For personal use only Y Yanchep h G Golf lf E Estate, t t WA W ll d WA Wellard, Financial assumptions p
Slide 45: Key financial assumptions
Key financial assumptions Balance sheet assumptions For personal use only » Based on 31 Dec 2012 balance sheets of Peet and CIC, adjusted for » Stepped acquisition of CIC (19.9%, then 80.1%) » Conditional, unconditional and Peet’s Chairman tranches of the equity raising completed, net of transaction