University of Canterbury gets approval to triple borrowing limit to $150m

The University of Canterbury, which has secured government funding to refurbish its engineering department and build a new Regional Science and Innovation Centre, has been given approval to triple its borrowing limit to $150 million by 2019.

The new limit includes the university's existing $50 million of 7.25 percent bonds, which mature in December 2019, the institution said in a statement to the NZDX market, where the debt trades. The bonds, first issued in 2009, were last quoted at a yield of 6.94 percent.

The Canterbury earthquakes damaged university buildings and scared off students, forcing it to take charges of $150 million in writedowns and impairments in 2011 and resulting in a $114 million loss that year. Insurance reimbursements are still a feature of the university's revenue, making up $40.7 million of the $188 million it recognised in the six months ended June 30 this year. It warned of "significant volatility" in reported results in the face of ongoing remediation work.

The university today said it has signed a formal agreement for $260 million of government funding toward the $357 million cost of the engineering faculty and innovation centre. The funds were first flagged last October for key projects to rebuild the campus after the quakes in 2010 and 2011 and are part of a total spending plan of $1 billion over the next 10 years.

It can now draw its first $100 million for the innovation centre, for which it expects to have contracts signed in early 2015. It can draw down another $100 million a year after the first payment and a further $50 million in 2019 if required.

The University of Canterbury reported a 72 percent increase in its net surplus to $42.9 million in the first half of the current year.

(BusinessDesk)