Arvida, the retirement village operator formerly known as Hercules, has issued a prospectus for an initial public offer to raise $80 million for a planned mega merger of 17 privately-owned retirement homes.

The prospectus, lodged with the Companies Office today ahead of a company briefing tomorrow, said the shares will be priced in a range of 85 cents to $1 apiece.

The final price for the shares will be set through a bookbuild this week and listing on the NZX is expected on Dec. 18. The maximum number of new shares on offer will be between 80 million to 91.4 million, depending on the final price.

All Blacks Richie McCaw and Dan Carter, who held shares in Christchurch's Park Lane retirement village, are among existing investors expected to hold between 58.9 percent and 62.7 percent of the total shares on completion of the offer. The current owners will be exchanging over 90 percent of their current investment for shares in Arvida and these will be subject to escrow arrangements until May 31, 2016.

Arvida's indicative market capitalisation is between $199.8 million and $221.4 million while the aggregate of CBRE market valuations of the portfolio of resthomes is about $227 million. The current occupancy level is 94 per cent.

Set up in January this year, Arvida plans to combine 17 retirement village and aged care operations across New Zealand to form one of the larger industry players. Initially there were indications that 19 retirement villages would be involved. The portfolio will house over 1800 residents with a mix of 852 care beds and 812 retirement units and a number of brownfield sites available for development.

In a letter to investors lodged with the prospectus, chairman Peter Wilson said Arvida will target a dividend payout ratio of between 60 percent and 80 percent of annual underlying profit, resulting in an indicative cash dividend yield of between 4.2 percent and 4.7 per cent in the 2016 financial year. Based on current earnings forecasts, Arvida intends paying a first dividend of about $2.3 million in late May 2015 for the first financial quarter ending March 31.

The financial information in the prospectus shows the company is forecast to make a loss of $1.4 million in the 2015 financial year on revenue of $59 million. When the costs of the offer and aggregating the resthome portfolio are excluded, the prospectus says, underlying profit for the 2015 financial year would be $4 million, rising to $13.3 million in the 2016 financial year.

Some $70 million of the offer proceeds will be used to repay debt while $5.25 million is earmarked for facility investors and $4.35 million to cover the offer costs.

There's also a sweetener in the deal for those who set up Arvida and board and senior management team members. Around 2.3 million shares are also being issued to GA Village Management Services, an entity involved in setting up Arvida, and to current and former board members and senior management team members, with up to 1.2 million "at risk" shares to be issued on May 31, 2016, if the volume weighted average market price of shares around that time reaches 1.25 times the final offer price.

The senior management team will be led by chief executive Bill McDonald, who has held a number of senior positions with Stockland and ING in Australia where he has developed and operated retirement villages and aged care facilities.