Sample Stories for Troubled Company Reporter - Asia Pacific

PRIMELIFE CORP: To Restructure with Babcock & Brown Group

Troubled Company Reporter, June 05, 2007

Primelife Corporation Limited and Babcock & Brown disclosed on May 30, 2007, that they have executed an implementation agreement for the restructuring of Primelife to create Babcock & Brown Communities Group.

BBC is expected to be the largest Australian Securities Exchange listed vehicle with a pure exposure to the ownership, operation and development of Australian and New Zealand senior living communities, with approximately AU$1.8 billion in total assets.

Under the restructure proposal which is subject to shareholder approval, Primelife will:

    * Acquire the balance of 74.7% of PrimeLiving Trust and  
      Babcock & Brown's 55% interest in the development joint   

    * Enter into a management agreement with Babcock & Brown and
      rename itself to Babcock & Brown Communities Limited;
    * Re-organise its capital structure into a stapled security
      to be known as BBC;
    * Conduct a major capital raising of a minimum of AU$300  
      million; and
    * Acquire the assets of the WA based Fini Villages.

                       Capital Raising

The minimum amount of the capital raising of AU$300m has been fully underwritten at a fixed price of AU$1.15 per security by the Joint Lead Managers (ABN AMRO Rothschild, JPMorgan Australia Limited and Macquarie Equity Capital Markets Limited) and Co-Lead Managers (CommSec and Tricom).  There will also be a discounted priority offer of at least AU$50 million to existing Primelife shareholders, PLFGA Noteholders, BBC staff and retirement village residents at AU$1.10 per security.

The directors of Primelife have unanimously recommended that Primelife shareholders support the restructure proposal in the absence of a superior proposal.  Primelife board members intend to vote in favour of the restructure proposal in respect of their own holdings of Primelife shares.

Upon completion of the restructure proposal (including the acquisition of the Fini Portfolio), BBC will comprise 61 senior living communities (44 retirement villages and 17 aged care facilities) across all the Australian mainland states and New Zealand, with over 6,200 retirement village units and 941 aged care beds, providing lifestyle and care solutions to over 8,300 residents.

Along with a diversified portfolio of mature assets, BBC will have a substantial identified development pipeline with land bank for over 2,000 retirement village units across 18 sites and 171 aged care beds to be developed largely over the next 6 years.  BBC's target is to deliver and sell approximately 300 new ILUs per annum over the long term, initially from its existing development pipeline and over time through newly identified development opportunities. 

                    Expected Shareholding

Assuming a minimum AU$300 million capital raising and subscriptions by Primelife shareholders for AU$50 million under the priority offer, on completion of the Restructure Proposal, BBC's expected shareholding will be:

    * Current Primelife shareholders - 38%;
    * Babcock & Brown - 10%;
    * New BBCG stapled securities holders - 48%; and
    * MFS - 4%.

Babcock & Brown and MFS will enter into voluntary escrow agreements for their BBC stapled securities for 12 months and 6 months respectively.

Full details of the restructure proposal (including an Independent Expert's Report) is expected to be provided in an Explanatory Memorandum to Primelife shareholders in June. A shareholder meeting and a scheme meeting will be held in July where Primelife shareholders will vote on the restructure proposal.

                       About Primelife

Headquartered in Melbourne, Australia, Primelife Corporation -- -- develops and manages properties    catering to a wide range of senior living needs, including independent retirement living, serviced apartments, aged care or low care hostels and high care nursing homes, and in-home care.

Primelife almost skidded into insolvency when, on September 23, 2004, the Australian Securities and Investments Commission filed 37 proceedings in the Federal Court of Australia seeking, among other things, orders that an investigating accountant be appointed over managed investment schemes under Primelife to report to the Federal Court to ascertain the position of each of the schemes.  The ASIC also applied for the schemes to be wound up.

The ASIC alleged that the schemes are not registered, as required under the Corporations Act.  The ASIC brought the Federal Court proceedings against Primelife and a number of other defendants including parties who, the ASIC alleges, have been involved in promoting and managing the schemes to a large number of investors since 1997.

The unregistered schemes are undergoing or were completely wound up starting October 2005.  The Company had currently resolved most of the legal issues and was turning the corner after a couple of years.

The Troubled Company Reporter - Asia Pacific's Distressed Bonds Column on Mar. 13, 2007, showed that Primelife Corporation's bond, with a coupon of 10.000% and maturity date of Jan. 31, 2008, trades at 1.02% of its face value.

About the InterNet Bankruptcy 
LibraryLearn more about TCR - AP
About the InterNet Bankruptcy 
LibrarySubscribe to the Troubled Company Reporter -- Asia Pacific