Freight, port and logistics firm Qube will make one of the largest non-mining investments in the country with a five year plan to spend upwards of $400 million developing a new freight hub in Sydney’s southwestern suburbs.
The company yesterday launched a $350 million capital raising from shareholders and major investors to fund development of the facility that will handle goods from the port of Sydney and the rest of the country via a rail and warehouse hub.
The fully underwritten equity raising announced on Wednesday comprises a $228 million one for 15 entitlement offer at $2.35 per share, and a $122 million institutional placement priced between $2.40 and $2.45.
Qube shares were trading at $2.64 prior to being placed in a trading halt for the raising, so the discount is a modest 11% for shareholders and around 9% for big investors.
Following the equity raising, Qube says it will have adequate liquidity to fund the warehousing investment and other organic growth capex, while retaining capacity to pursue additional strategic growth opportunities.
Qube says it will spend $80 million warehouse construction at the Moorebank Logistics Park in south west Sydney, and the balance is to be allocated for other investment and future growth.
“Qube is pleased to have achieved a further important milestone, with the development of the first new warehousing at Moorebank bringing us a step closer to realising the substantial benefits that the Moorebank project will deliver for customers, suppliers, and the entire east coast freight and logistics chain,” Qube managing director Maurice James said in a statement announcing the fund raising.
Qube began work this month on the logistics park, which will be linked by rail to Port Botany and will have 850,000 square metres of warehouse space when completed. The company says it in talks with potential tenants.
“We are delighted with the initial reaction of potential tenants to the transformational proposition that is provided by the Moorebank facility” Mr James said.
Qube said the new warehousing at Moorebank is intended to be built on demand and with pre-commitments from tenants. There is a range of funding options for future warehousing development including third party funding, tenant funding, or Qube funding. Further warehousing funded by Qube in the next 2-3 years will continue to be driven by tenant partnering considerations and the delivery of maximum long term value to Qube shareholders.
Qube says it has invested $140 million so far this financial year to acquire the remaining 33% of Moorebank it did not already own and on initial development capex.
Construction on a warehouse for the first tenant and an initial warehouse facility for Qube’s own logistics business is expected to begin early next year and the company expects total capital expenditure in the first five years of the project to total $400 million (excluding warehousing and rail shuttle capex).
In addition to this project, QUBE has already spent more than $230 million on other deals this financial year.
"In addition to completing the acquisition of 50% of the Patrick terminals business, Qube has undertaken a number of other growth initiatives in FY17, including: $136 million of M&A, including the acquisitions of the remaining 50% of AAT that Qube did not already own as well as Austrans; and $70 million of growth capex committed to or approved in FY17 year to date, including new locomotives, warehousing at Altona, facility upgrades at Minto to support an automotive logistics hub, equipment for new contracts and land near the port in South Australia used by Qube Logistics.”
