Capital & Counties PLC launches £250mln bond offering exchangeable for

PLC () announced the launch of a £250mln offering of Secured Exchangeable Bonds due 2026, exchangeable for ordinary shares of PLC ().

Capital & Counties holds 25.2% of Shaftesbury, which is a real estate investment trust focused on London’s West End, after buying shares in two tranches for an average price of 517p.

The bonds will be issued at par and are expected to carry a coupon of 1.5-2% per cent per annum and, subject to certain conditions, can be exchanged into fully paid ordinary shares of Shaftesbury.

The FTSE 250 landlord said it will use the proceeds to cut debt, which now stands at £721mln.

Once the bonds are issued, the firm will have access to £890mln of cash and undrawn facilities.

“Based on yesterday’s close, this implies a circa 25% premium to our trough NAV of 610p for Shaftesbury,” analysts at Peel Hunt commented.

“Importantly this should go a long way to allaying fears that Capco would follow Shaftesbury in issuing dilutive equity… This is a sound move and should be welcomed by investors.”

Shares in Capco shed 3% to 141.35p while Shaftesbury dropped 5% to 540.5p on Thursday morning.