NEWS

Austcorp Exits Debenture Market

17 December 2007

National property developer and investor Austcorp Group Limited announced today that it will close its debenture business and redeem all Austcorp Capital debentures on issue to 700 public investors, amounting to $30 million.

Austcorp Executive Chairman, Trevor Chappell, said Austcorp has restructured its corporate debt following an agreement with Keybridge Capital Limited, who are providing an alternative source of funds to replace the debentures. All investments together with accrued interest will be returned to the debenture holders on 18 February, 2008. Austcorp has written to inform all debenture holders.

Mr Chappell said the decision to redeem the debentures was an acknowledgement of the changed market sentiment relating to debentures. The negative sentiment created by recent collapses in the industry has had a flow through effect on all debenture issuers irrespective of the issuers’ capital structure. He said Austcorp was no longer prepared to accept the uncertainty or potential reputational damage by association with the collapsed companies.

“The Austcorp Capital debenture has given investors a good option for fixed interest products, and has been a part of Austcorp’s balanced funding structure. Unlike the debenture issuers who failed, debenture funding was only a small amount, or 13%, of our overall group debt.

“We encourage and welcome actions by ASIC to improve protection to retail investors. However, the change in the regulatory environments and the negative public perception of all debenture issuers irrespective of merits has led us to our decision,” he said.

Mr Chappell said that since Austcorp Capital debentures were first issued in 2004, Austcorp has always fulfilled its payment obligations to all investors on time.

Read our frequently asked questions about the early redemption.