Less than a year into the job,
University of Canterbury vice-chancellor Rod Carr is stamping
his commercial experience firmly on university activities.
The university this morning launches a $100 million listed
philanthropic bond issue, which it says is the country's
first bond of its type.
Dr Carr said in an interview that the issue was an exciting
opportunity for New Zealanders to make a direct investment in
education infrastructure, and help the university progress
from being a high-quality institution to one that could call
itself host to a world-class learning environment.
Dr Carr became vice-chancellor in February.
Previously, he was managing director of Jade Software
Corporation.
Before joining Jade in 2003, he was deputy governor and
director of the Reserve Bank.
He has LLB(Hons) and BCom(Hons) degrees from the University
of Otago.
He was instrumental in launching the Bank of New Zealand's
trust group in 1987 and a global index bond in the early
1990s.
In the next 10 years, the university planned to invest as
much as $500 million in developments such as building
refurbishments, new buildings, ICT infrastructure and
alternative technologies to develop a world-class learning
environment, attracting outstanding scholars from across the
spectrum of academic disciplines.
"We need to promote a learning environment that attracts
people who have the desire and potential to make a
difference. We owe it to our children and grandchildren to do
all we can to stop what I fear could become the great brain
robbery," he said.
Increasing numbers of universities in Australia, India and
China were not only better equipped than New Zealand, they
were investing substantially more in support of their
teaching and research, Dr Carr said.
The university's ambition to realise its potential was
constrained, despite the funds it retained from grants and
fees for teaching and research, and one-off grants from the
Government and donors.
"This bond issue, the first by a New Zealand tertiary
institution, aims to secure additional resources for the
world-class teaching and research facilities that will enable
the acceleration of the current investment plan."
Of the $500 million capital development planned by the
university, it could fund $350 million from its operating
profit.
The bond issue could raise another $100 million.
That would take the university's debt to equity ratio from
zero to 12%.
Taking money from people in the current economic climate was
hard, and there was not a great philanthropic community in
New Zealand, he said.
The only approach seemed to be "this is a stick-up, give us
your money".
The bonds gave people the opportunity to invest with the
university and, if they wanted to, they could lessen the
burden by reducing the interest requirements to zero for some
or all of their bonds.
That reduced burden on the university would enable it to
fulfil its capital works programme sooner, Dr Carr said.
During the term of the bond, investors would be invited to
consider donating part, or all, of the sum owed on maturity.
The university would continue to pay the investor interest on
the bond principal they had donated, if they so elected.
"This optional philanthropic element of the bond issue will
allow investors to direct their support to higher education,
while tailoring their contribution in light of their own
circumstances, which may change over the term of the bond."
The offer opens today and closes on November 30.
Murray and Company and First New Zealand Capital are the
joint lead managers.
Dr Carr said the bond met all security requirements and
should appeal not only to New Zealanders but to overseas
investors who could follow their money into New Zealand.
Many of those investors had an interest in research and
teaching.
dene.mackenzie@odt.co.nz
At a glance
- Ten-year, unsubordinated, unsecured, fixed-rate bond with
philanthropic options.
- $50 million with an ability for oversubscriptions of
another $50 million.
- Rate is 7.25% for the first five years, then reset at a
margin of 1.75% over the then prevailing five-year swap rate.
- Listed on the New Zealand debt market.
- Bond owners can make a charitable gift of bond principal to
the University of Canterbury Foundation.
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