Caltex to raise $500m, sell more petrol stations as it waits on suitor


Couche-Tard was a “very serious” company and a credible bidder, he said.

Company executives told an investor day presentation on Thursday they intended to issue between $300 million and $500 million of hybrid capital securities as part of Caltex’s ongoing capital management strategy.

Investors heard Caltex had sold 25, mainly inner-city, petrol station sites for $136 million which it had identified in its convenience retail review as having development potential.

“It is expected that $120 million of sale proceeds will be received this calendar year, with the balance in early 2020,” the company said. Caltex expects to net $92 million from the sale after paying out remediation costs and capital gains tax.

The divestment comes at a time of “attractive valuations for quality freehold property assets” which spurred Caltex to announce it will kickstart the sale of a further 25 petrol station sites across Australia early next year.

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Caltex has previously issued hybrid securities to attract capital.

“The proposed issue will diversify the company’s capital sources, strengthen the balance sheet and increase financial flexibility,” managing director and chief executive Julian Segal said.

The raising will support the company’s credit profile and will be launched in the first half of next year, he said.

Caltex, which operates a refinery business alongside a network of more than 500 fuel and convenience outlets, appointed Grant Samuel and UBS as advisers and lawyers King & Wood Mallesons to oversee the capital raising.

The company has suffered from lower refiner margins and a difficult retail environment with subdued demand from sectors such as agriculture, transport and construction.

“The share price has been pretty much at a low point, reflecting soft trading conditions,” Mr Segal said on Thursday, “but clearly in our view this is something that is not going to continue forever”.

In a trading update last month it said it expected earnings before interest and tax from its petrol stations to be between $190 million and $210 million – an improvement from its first-half earnings but vastly lower than the previous year’s profit result of $307 million.

Couche-Tard operates 16,000 stores across Canada, the United States, Europe, Mexico, Japan, China and Indonesia.

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