Villa World targets $80m capital raising to ramp up growth

Villa World today announced an $80 million capital raising venture as it prepares roll out of an accelerated growth plan that will deliver big returns for shareholders.The Company will tap into its existing strong institutional investor support with an equity offer and a debt offer that will boost its financial capacity to continue to grow inventory through value accretive acquisitions and joint ventures, while maintaining prudent gearing levels.The Company is targeting continued cumulative average Earnings Per Share (EPS) growth of greater than 10% p.a.1 and continued growth in earnings.Managing Director and Chief Executive Officer Craig Treasure said the capital raising, combined with the recent extension of the maturity dates as part of its flexible bank arrangement, would place Villa World in a strong position to actively acquire projects in strategic locations.The Company has pursued a growth strategy centred on replenishing its five to six-year project pipeline and adding acquisitions in strategic growth corridor ‘hot spots’.“Villa World has been actively restocking our project land bank during the past four years, almost tripling our lot portfolio in that time,” Mr Treasure said.“With continued sales momentum and strong demand from an increased number of residential projects on the market, the Company is poised to step up our growth strategy and capitalise on market opportunities.”The Company today announced an Equity Offer comprising a fully underwritten placement of new ordinary shares at an issues price of $2.25 per share. The Placement will raise approximately $20 million.The Company will also offer a non-underwritten Share Purchase Plan (“SPP”) to eligible shareholders for up to $15,000 worth of shares per shareholder. The SPP is expected to raise $10 million (subject to change or scale- back at the Company’s discretion).A separate Bond Offer targeting institution investors and broker firms will seek to raise $50 million by issuing 500,000 Bonds with a Face Value of $100 per bond. No general public offer of the Bonds will be made.The Company brought on EY as Advisor, ANZ as Lead Arranger, and ANZ, Evans & Partners and Morgans as Joint Lead Managers on the bond raising.Mr Treasure said: “Together with the recent extension of our senior debt facility, the capital management initiatives announced today will ensure that we continue to be in a strong position to take advantage of market acquisition opportunities at prudent gearing levels.“Villa World gives ongoing consideration to capital management strategies. The Bond Offer diversifies the Company’s debt facilities, and increases the average maturity of its borrowings.”Villa World has invested approximately $164 million in land acquisitions this financial year, with an expected yield of more than 2,300 lots.“Our growing pipeline supports our target of continuing to achieve cumulative average earnings per share (EPS) growth of greater than 10% p.a.,” Mr Treasure said.Robust sales and increased revenue contributed to Villa World last month declaring a strong half year profit result and prompting an upgrade in its full year guidance to a profit after tax of $37.5 million, representing 11% expected growth on its FY16 result.Villa World declared an interim dividend of 8 cps. Directors anticipate a final year dividend of 10.5 cps, bringing total dividends of 18.5 cps for the full year – a strong 8.2% yield on the placement price.Established in 1986, Villa World is an ASX300 property company and one of Australia's largest housing providers.