Oxley’s 6.9% Exchange Offer to the New 7.25% Notes

Shawn Sng  |   12 Mar 2024  |    41 views

Title: Oxley’s 6.9% Exchange Offer to the New 7.25% Notes

 

On 11th March 2024, Oxley announced the exchange offer for their bondholders to exchange their existing Oxley 6.9% 8July2024 notes for the new 7.25% notes. The exchange offer came just 4 months before the maturity date of the current 6.9% notes on 8th July 2024. The new notes are expected to be issued on 28th March 2024 with a slightly higher coupon rate of 7.25%. Additionally, there will be 3 coupon payments for the new notes payable on 28 September 2024, 28 March 2025 and 28 July 2025 which is also the maturity date.

 

Overview of New 7.25% Exchange Note

Bond Name: Oxley 7.25% 28July2025

Tenor: 16 Months

Settlement Date: 28 March 2024

Coupon Dates: 28 September 2024, 28 March 2025, 28 July 2025

 

Hence, should investors consider this offer? Let’s take a closer look.

 

Quick Company Overview

To refamiliarize ourselves, Oxley Group is a property developer with business presence across six geographical markets including Singapore, the United Kingdom, Ireland, Cambodia, Malaysia and the People’s Republic of China. The Group specializes in the development of quality residential, commercial, industrial and hospitality projects. Oxley is listed on SGX (ticker:5UX) with a market capital of $386.28m as of 14th March 2024. The group does not have any credit rating unfortunately.

 

Oxley 1HFY2024 Financials

In 1HFY2024, Oxley’s recorded a revenue of $164.4m. This is -63% lower YoY as compared to $438.3m in 1HFY2023. Additionally, its 1HFY2024 revenue was also made up of 38% from its Developed Market sector (Singapore, United Kingdom, and Ireland) and 62% from its Emerging Market sector (Cambodia, Malaysia and Others). The reduction in revenue was due to lower revenue recognized in its Singapore property projects as the projects have been fully sold, hence the reason why its Emerging sector’s revenue was more than its Developed sector this time around. However, the lower revenue was partially offset by higher revenue recognized from its Oxley Tower KLCC project and its hotel operations in Singapore. Also, the group’s reduction in the bank’s borrowings has lowered its finance cost by -28% YoY from $74.2m in 1HFY2023 to $52.8m in 1HFY2024.

 

Diving into the group’s liquidity, Cash and Cash Equivalents have also fallen by -68% YoY from $152.8m in FY2023 to $48.9m in 1HFY2024 mainly due to the repayment of bank and debts obligation to lower financing costs. As a result, the gearing ratio for the group has improved from 1.62 times in FY2023 to 1.44 times in 1HFY2024 due to lower net borrowings in 1HFY2024. The group’s management has also stated during their exchange meeting that they will remain focused on further lowering their gearing moving forward. The management also shared their cashflow visibility which they indicated that they are expecting cashflows to come in from their Oxley Tower KLCC and Riverscape projects

 

Focusing on the group’s debt maturity schedules, there is a steep tower that will be maturing in 2025 (approx. $996m) which the main bulk is mainly made up of $756m in Investment Properties Loans (IP loans) & $195m in Bonds. Of the $756m IP loans, $684m which are due within the next 12 months comprises the credit facilities of their Novotel and Mercure Singapore, the Rise@Oxley, the office unit of Oxley towers and Space@Tampines. As previously mentioned, as of Oxley’s latest result, the group currently only has $48.9m which will be insufficient to meet these debt obligations. Hence, the group management has sought an Exchange Offer this time around which translates to the $195m that is shown in in FY2025. The management has mentioned that they have already started the discussions on paring down the debt tower in 2025 using the sales proceeds collected from the sold units and asset divestments and are confident in doing so.

Source: Oxley

 

Cashflow visibility

Within the next 12 months, the Group will receive sale proceeds of approximately S$182 million progressively from Singapore development projects including Riverfront Residences, Affinity@Serangoon, Kent Ridge Hill Residences, Mayfair Modern and Mayfair Gardens. The sales proceeds will be used to pare down the Group’s project loans and corporate loans, and pay off the Remaining Series 004 Notes. The management of Oxley also expects to progressively receive sales proceeds from sold units of overseas development projects mainly Oxley Tower KLCC and Riverscape to come and use the sales proceeds from the sold units to pare down and/or pay off the balance.

 

Timeline of the Exchange Offer

 

  • 11 March 2024 – Invitation for exchange offer
  • 21 March 2024 11.00 a.m. (Singapore time) – Expiration Deadline
  • 22 March 2024 – Pricing of the Additional New Issue (if any)
  • 28 March 2024 – Settlement Date

 

For existing Oxley 6.9% note holders, accepting the exchange offer could be an option to consider if the investors still wishes to stay invested in invested in Oxley and wishes to lock in a higher rate for a slightly longer period till 2025, but a note of caution would be the uncertain cashflow visibility coming through in 2025 when their debt tower comes maturity. On the other hand for investors who are more apprehensive about this exchange then he/she should just hold their current 6.9% notes till maturity and wait for the redemption on 8 July 2024.

Related Articles

Hotel Properties 5.1% 5yr Senior Unsecured SGD

Hotel Properties recently announced the issuance of its Senior Unsecured notes at final price guidance of 5.1%.

Shawn Sng  |   23 Apr 2024

Wing Tai 4.38% 5yr Senior Unsecured SGD

Wing Tai recently announced the issuance of its Senior Unsecured notes at final price guidance of 4.38%.

Shawn Sng  |   26 Mar 2024

Phillip Macro Update – Key Points for March FOMC Meeting

The U.S. Federal Open Market Committee (FOMC) concluded its two-day meeting on the 20th of March 2024. The meeting discussed the Fed’s monetary policy stance and economic projection.

Shawn Sng  |   21 Mar 2024

Recent Articles

Hotel Properties 5.1% 5yr Senior Unsecured SGD

Hotel Properties recently announced the issuance of its Senior Unsecured notes at final price guidance of 5.1%.

Shawn Sng  |   23 Apr 2024

Wing Tai 4.38% 5yr Senior Unsecured SGD

Wing Tai recently announced the issuance of its Senior Unsecured notes at final price guidance of 4.38%.

Shawn Sng  |   26 Mar 2024

Phillip Macro Update – Key Points for March FOMC Meeting

The U.S. Federal Open Market Committee (FOMC) concluded its two-day meeting on the 20th of March 2024. The meeting discussed the Fed’s monetary policy stance and economic projection.

Shawn Sng  |   21 Mar 2024

Disclaimers

These commentaries are intended for general circulation. It does not have regard to the specific investment objectives, financial situation and particular needs of any person who may receive this document. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of the units and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. Investors may wish to seek advice from a financial adviser before investing. In the event that investors choose not to seek advice from a financial adviser, they should consider whether the investment is suitable for them.

The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the "Research") contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries.

Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned.

Contact us to Open an Account

Need Assistance? Share your Details and we’ll get back to you

IMPORTANT INFORMATION

This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <www.phillipfunds.com> for more information in relation to the dividend distributions.  

The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

This advertisement has not been reviewed by the Monetary Authority of Singapore.  

 

Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
Tel: (65) 6230 8133 Fax: (65) 65383066 www.phillipfunds.com

?>