OK, so OSIM is planning to trade a pound of flesh for money (assuming share price exceeds $2.025).....
(Not Vested)
Business Times - 09 Jun 2011
OSIM places out $120m in convertible bonds
Bonds mature in July 2016; conversion price at $2.025
By NISHA RAMCHANDANI
OSIM International has fully placed out $120 million in unsecured convertible bonds to institutional and accredited investors, the lifestyle products group said yesterday.
However, its shares shed eight cents in trading to close at $1.54 yesterday after the company announced the bond issue earlier in the day.
The five-year convertible bonds, which mature on July 5, 2016, will be convertible into new OSIM ordinary shares at an initial conversion price of $2.025 per new share. This represents a 25 per cent premium over the closing price of $1.62 per OSIM share on June 7.
The Singapore dollar-denominated bonds will bear interest at the rate of 2.75 per cent per annum, payable semi-annually in arrear. This is at the top end of the likely 1.75 per cent to 2.75 per cent range that BT reported in an article published on June 8.
Upon full conversion of the bonds, some 59.26 million new OSIM ordinary shares will be issued, representing 7.82 per cent of OSIM's existing issued and paid-up share capital as at June 7.
The bonds have a put option in the third year, as well as an issuer call also in the third year. The trigger for the issuer call is 125 per cent above the conversion price.
'OSIM is continuing with the roll-out of our business in China and North Asia and is constantly seeking new value-added acquisitions as part of our growth strategy. The issue of the convertible bonds represents an additional source of growth capital to pursue opportunities in Asia, with a focus on China,' said CEO Ron Sim.
Hongkong and Shanghai Banking Corporation (Singapore), Credit Suisse (Singapore) and The Royal Bank of Scotland (Singapore) are the book-runners and lead managers. According to Matthew Song, HSBC's head of equity capital markets (South-east Asia), demand for the bond issue was robust, with it being oversubscribed by more than five times.
OSIM is planning to use the $118.3 million in net proceeds as general and working capital, to finance potential acquisitions and/or to reduce existing debts.