Sino Grandness

[specuvestor]

Thanks portuser. I understand the mechanics of the exchangeable bond

Technically the GS bond, as felix pointed out, is not a CB, it is an exchangeable bond GURANTEED by SinoGrand. Either way shareholders of SinoGrand will be marginalised based on the strike price of the exchangeable bond. It is like a credit facility by GS in exchange for pre-IPO entry of Garden Fresh, which traditionally will be priced around like 10% of IPO price.

Are the figures and dates below correct? Sorry if I confused SHK with Goldman tranche. That means what they have just raised RMB260m with 40% earmarked as working capital and RMB60m cash on hand is about nice to repay SHK, and with such coincidental timing to boot? In any case cash is fungible.

BTW SHK is the one who did the bond deal with Eratat as well.

Redemption penalty
The penalty that Garden Fresh faces is not four times the value of the bonds.
The worst case will result in Garden Fresh redeeming the bonds 73% higher than face value when no effort is made on its listing.
If the listing fails despite effort being made, the redemption will be 52% higher. than face value.
Redemption will be in two stages.
The first redemption of RMB 152m takes place in Sep 2014 for the RMB 100m bonds issued to Sun Hung Kai.
As for the RMB 270m bonds issued to Goldman Sachs, redemption is RMB 411m in Oct 2015.
If Sino Grandness continues to do well, it may be able to redeem the bonds from profit, or from bank borrowings as it becomes more credit-worthy.