Parque Arauco Issues Bonds at Lowest Yields in the History of Corporate Issuances in the Chilean Capital Market

SANTIAGO, Chile--()--Parque Arauco S.A. (SSE: PARAUCO) (Bloomberg: PARAUCO:CI) issued bonds for UF 5 million (approximately US$ 200 million), equivalent to 19% of the current financial liabilities of the company.

The Company issued and placed a 21-year bond with a 10-year grace period for UF 2 million, at a 2.48% yield, with a 105 bps spread. This is the lowest yield for a Chilean corporate bond issuance for bonds with a duration greater than 10 years (excluding banks and state-owned companies). The company also issued and placed a 7-year bond with a 3-year grace period, for UF 3 million, with 1.73% yield, with an 82 bps spread. This issuance also had a historic low yield for Chilean corporate issuances (excluding banks and state-owned companies) with a duration greater than 4 years. The use of the funds is mainly to refinance bank loans.

Juan Antonio Alvarez, Executive Vice President, stated regarding this transaction: “We are very satisfied with the result, as these exceptional financing conditions are the result of many years of work.

"Firstly, this is due to the profitable growth of Parque Arauco in the past years. Between December 2010 and June 2016 the Gross Leasable Area (“GLA”) grew 98% reaching 873,000 m2. In the same period, the consolidated EBITDA grew 103%, reaching Ch$105,593 million in the last twelve months as of June 2016.

"Secondly, the favorable conditions were achieved thanks to the responsible financing policy of the company. Since December 2010 Parque Arauco has done three capital increases to finance growth, raising Ch$ 256,333 million. These capital increases, as well as the company’s retained earnings, has allowed the equity to increase 117% between December 2010 and June 2016, which amounts to Ch$ 841,527 million as of June 2016.

"Thirdly, the attractive financial conditions were the result of the recent liability management of the company. In the past three years, Parque Arauco has improved its risk ratings classification two notches from A to AA-. In 2014, the company did a bond exchange to cancel the mortgages on Parque Arauco Kennedy and improve the conditions for future issuances. In 2015, Parque Arauco issued a local bond that allowed the matching of the duration between assets and liabilities. Also, in the last months, the company refinanced its debt in USD into local currency, and reduced its exposure to variable rate financial liabilities.”

The company continues to work on a plan to grow profitably, increase diversification by country and format and strengthen sustainability initiatives, which include, among others, the strengthening of corporate governance, the reduction of operational and financial risks, and the work with the local communities where we develop our new projects.

The financial advisors and placement agents for the transaction were Bice and Credicorp Capital.

Parque Arauco has 873,000 m2 of total GLA in Chile, Peru, and Colombia. The company inaugurated its first shopping center in Chile in 1982, entered Peru in 2005 and Colombia in 2008. The company’s assets include six regional shopping centers, four premium outlet malls and thirteen strip centers in Chile; six regional shopping centers, eight neighborhood centers, two premium outlet malls and two strip centers in Peru; and two regional shopping centers in Colombia as well as a large land bank to support the company’s future growth plans. For more details, visit the company’s website: www.parauco.com.

Contacts

Parque Arauco S.A.
Sarah Inmon, (56 2) 2299 060
Head of Investor Relations
sinmon@parauco.com

Contacts

Parque Arauco S.A.
Sarah Inmon, (56 2) 2299 060
Head of Investor Relations
sinmon@parauco.com