19th Dec 2008 07:00
19 December 2008
Hansteen Holdings plc
("Hansteen" or "the Company")
HANSTEEN CLOSES CURRENCY HEDGING CONTRACT
Hansteen (AIM: HSTN), the investor in European industrial property, announces that it has closed out its currency hedging contract which, as a Sterling denominated company investing in Europe, it had originally taken out in order to reduce the impact on its balance sheet of translating assets denominated in Euros.
With the recent rapid and extreme strengthening of the Euro, the Sterling value of the Company's property portfolio has significantly increased. However, the hedging contract was showing an offsetting deficit, which would have been "marked to market" in the balance sheet at 31 December 2008 had the contract continued. The deficit in the hedging contract was so significant, due to the rapid and extreme devaluation of Sterling, that the Company were required to provide increasing cash collateral against the future contract. With no visibility as to whether or when the weakness in Sterling would abate, maintaining the contract would have left the Company exposed to an unquantifiable cash commitment. Accordingly, the Company has now terminated its hedging contract at a one-off cash cost of €57.6 million. This cost is exceeded by the appreciation in the Sterling value of the Company's property portfolio and as a result there has been no negative effect on net asset value.
Taking into account payment for closing out the contract, Hansteen will have a gross debt to value ratio of only 49% with a total annualised interest bill of €16.1 million versus a current annualised rent roll of €42.7 million all comfortably within its banking covenants.
Morgan Jones, Joint Chief Executive, said: "Before cancelling our currency hedge the rapid and extreme weakening of the Pound combined with the risk that this weakening may continue meant that not only were we not benefiting from the strengthening Euro but we were using cash to meet the hedging contract shortfall. We are pleased to have been able to close our positions without compromising prudent borrowing levels or otherwise harming the business. In time we expect to put some new hedging arrangements in place, but for the moment our currency exposures are un-hedged."
-Ends-
For further information:
|
Ian Watson / Morgan Jones Hansteen Holdings plc Tel: 020 7016 8820 |
David Davies/ Matt Goode KBC Peel Hunt Tel: 020 7418 8900 |
Jeremy Carey / Gemma Bradley Tavistock Communications Tel: 020 7920 3150 |
Notes to editors:
Hansteen Holdings plc is a property company formed by Morgan Jones and Ian Watson, the founders and former directors of Ashtenne Holdings plc. and floated on AIM in November 2005.
Hansteen focuses on investing in high yielding industrial properties in Europe, with opportunities for value improvement through asset management.
Related Shares:
HSTN.L