The West

Aspen seeks $100m from  equity raising
Aspen's St Leonards development in the Swan Valley.

Struggling WA property company Aspen Group is homing in on a replacement for departed chief executive Gavin Hawkins and could disclose an appointment in as early as a month.

Speaking after unveiling a heavily-dilutive $101 million equity raising to shore up Aspen’s strained balance sheet, stand-in chief executive and director Hugh Martin said the board had “somebody in mind” and hoped to make an announcement “within a month or two”.

Aspen and Mr Hawkins, the company’s joint founder, parted ways a month ago after a difference of opinion over strategy, prompting the board to appoint Sydney-based Mr Martin to the helm until a permanent replacement was found.

The property group has since announced a hefty loss on the back of major write-downs and disclosed plans to quit its residential syndicates and commercial development to concentrate on its investment properties and funds management.

Yesterday’s underwritten, one-for-one rights issue at a 28 per cent discount of 17¢ a share will be used to reduce debt and supplement working capital. It provides headroom to pursue planned asset sales and relieves pressure on Aspen from two covenant breaches of its core debt facility with National Australia Bank.

“It addresses our debt reduction program with our bankers,” Mr Martin, a former Lend Lease director, said.

“It enables us to get back to simplifying the business and gives us a little breathing space to address the non-core assets.”

Some $35 million of the proceeds will be used to reduce debt, including $15 million to NAB, which was owed $136 million as at June 30.

Another $25 million will be put aside as cover for a looming put option under which Aspen is obliged to buy back units in the Aspen Development Fund No. 1 over the next three weeks.

In return for the pay-down, NAB has agreed to waive Aspen’s covenant breaches and extend the development fund’s own debt facility.

However, its agreement with Aspen also provides for the group to repay a further $71 million of borrowings by the end of next year via asset sales.

Aspen has already embarked on a $120 million program of disposals, including most recently the sale of a property in outer Melbourne for $18.4 million, as part of its strategic rethink.

Mr Martin said the rights issue negated any pressure on the group to undertake a fire sale of what he acknowledged were “hardly A-grade” properties.

That view was reinforced yesterday when Aspen also revealed it had booked an additional $36.6 million of impairments after deciding to fully write down its loans to associates. As a result, its bottom-line loss for 2011-12 has been restated to $149.9 million from $99 million previously.

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