HVN 0.00% $4.27 harvey norman holdings limited

harvey norman a growth stock??

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    Harvey looks to mortgages
    By Mark Todd
    March 24 2003

    Harvey Norman is planning to borrow against its $800 million property portfolio to raise funds for expanding its store network and other ventures.

    The retailer is near to finalising talks with its bank, ANZ, about a deal that, through a unique aggregation structure, could free several hundred million dollars in cash.

    It is proposed that Harvey Norman bundle a selection of its 150 sites in Australia and New Zealand and then approach a credit agency for a rating of the vehicle's investment worthiness. Harvey Norman would then take out mortgages on the properties.

    Harvey Norman's executive chairman Gerry Harvey said the deal would ensure the company could maintain ownership of the sites. "If I don't do that then I have to start looking at a property trust or selling some properties," he said.

    "People keep telling me to sell off the property and that I'm in retail, not property. 'No, no, no' I keep telling them. I'm really in property. I didn't buy these properties and build them up to sell them. I very rarely sell anything," he said.



    Harvey Norman has spent the past three years talking to ANZ about the project. Other banks could become involved as lenders once the venture obtains a credit rating.

    An agreement is expected within the next few months.

    Mr Harvey said the retailer doesn't require the cash immediately but he hoped the structure would support long-term expansion. The company is pursuing new developments in Slovenia, Dubai and Ireland, as a precursor to the UK.

    To get the venture started, Harvey Norman may put about $100 million worth of property into the vehicle. "But it's likely to be a lot more than that," Mr Harvey said.

    Investors are keen for Harvey Norman to make better use of what they consider to be an undergeared balance sheet.

    One fund manager said the company could use the funds for a share buyback to boost earnings per share as growth rates begin to mature.

    Mr Harvey said he was also considering floating the 12-store New Zealand business.
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