Ryman has acted to sure up its balance sheet in the face of increasing interest rates internationally, by approaching shareholders to tip in more cash.
Over the past seven years it has embarked on an aggressive retirement village expansion strategy which has seen it invest $3.9 billion in new land and construction, peaking in 2021 at around $670 million against operating revenue cash flows of around $180 million a year.
Debt is now at 45% which with the raising will reduce it to ‘a more comfortable’ 34%.
Ryman CEO Richard Umbers, in a statement last Wednesday, said they had decided to raise the money by issuing 180 million new shares at a discounted $5 each.
According to Ryman’s disclosures, the $NZ902 million is being raised to pay about $NZ834 of US Private Placement (USPP) debts taken out in the last two years, of which $NZ134 million represents the penalty cost of repaying the loans early.
Ryman has negotiated amendments to borrowing covenants up to and including September 2025 "to ensure continued covenant compliance". It is believed the USPP investors refused to agree to the amendments.
NZ construction to slow with move to villas
Interim Chair Claire Higgins said last Wednesday Ryman will slow and/or paused construction at six existing sites and it has revised its development pipeline towards lower density developments, "reflecting prudent management decisions made in response to elevated debt levels and changing market conditions including rising interest rates, the outlook for residential house prices, elevated construction costs and supply chain constraints".
"Future developments are expected to be more weighted toward retirement village units in order to right-size Ryman’s care offering and maximise returns”. As such, Ryman will move to a staged development of villas rather than apartments, and it is revising downwards to 40-80 aged care beds in each new development.
Ryman Australia informs us that these changes do not impact Australia’s construction program.
You can learn more at the LEADERS SUMMIT: Cameron Holland, Ryman Australia CEO, will be presenting the Ryman continuum of care model and Australian plans.
