Alpha Plus launches 5.75% retail bond
A private education provider has launched a 5.75% retail bond, which matures in 2019.
Alpha Plus Holdings, which is chaired by Sir John Ritblat and owned by property fund DV4 Limited, will secure its bond against a portfolio of real estate in central London comprising several schools.
The company owns 19 schools, nurseries and sixth form colleges across the UK in locations including Notting Hill, Tonbridge and Cambridge, providing education for some 3,600 pupils, with that number growing every year.
The issue of the bond comes despite the group's 62.2% increase in turnover in the five-year period to 31 August 2012, from £35.7 million to £57.8 million. Earnings before interest, tax, depreciation and amortisation (EBITDA) over the same period rose 64.9% to £8.18 million.
The entire portfolio of the group currently consists of 14 freehold properties (against which the bond will be secured) and 17 leasehold properties, with a current valuation of £130.7 million.
Alpha Plus intends to use the money raised by the bond to repay shareholder debt up to the value of £40 million and thereafter for "general corporate purposes" and "to pay down further shareholder debt".
The minimum investment is £2,000 with further purchases in increments of £100.
Interest will be paid semi-annually, on 18 June and 18 December, in arrears in equal instalments of £2.875 per £100 of investment. The bonds will be available to trade on the open market after the initial offer period, which is expected to end on 11 December.
Logistics company Stobart pulled its 5.5% six-year retail bond yesterday. It had initially launched it on 13 November, to give a "useful mix to its funding".
However, it said that due to larger bond issuers with higher coupons entering the market over the past few weeks, it had decided not to proceed with the bond issue.
Stobart chief financial officer Ben Whawell said: "We will keep under review the possibility of issuing a retail bond in the future, as we see it as a potential attractive funding option, but only when we feel the cost of the bond to the company, its attractiveness to investors and its liquidity characteristics are in the right alignment."
This article was written for our sister website Money Observer
A catch-all phrase that can range from assessing the price of a property or vehicle before offering it for sale or the net worth of assets in an investment portfolio to the prices of shares on a stock exchange.
The right to hold or use assets (generally property, but also vehicles) for a fixed period of time at a given price, without transfer of ownership, on the basis of a lease contract. Leasehold ownership of a residential property is simply a long tenancy, the right to occupation and use of the flat for a specified period – the ‘term’ of the lease, which is fixed at the beginning and so decreases in length year by year and the property can be bought and sold during that term. When new, leases are for 99 or 125 years until its eventual expiry, whereupon ownership of the property reverts to the landlord.
Everything you own: all your assets (property, cars, investments, savings, insurance payouts, artwork, furniture etc) minus any liabilities (debts, current bills, payments still owed on assets like cars and houses, credit card balances and other outstanding loans). When you’re alive this is called your wealth; when you’re dead, it becomes your estate.
“Arrears” tend to be associated with debt. If you fall behind and miss payments on any outstanding debt, the amount you failed to pay is an arrear – the amount accrued from the date on which the first missed payment was due.
Permanent and absolute ownership and tenure of a property (residential or commercial) and/or land with freedom to dispose of it at will but with no time limit as to how long the property/land can be held (in perpetuity). Freehold is the opposite of leasehold.