Core Projects to sell $60 million five-year zero-coupon convertibles at 7.25%-7.75%, up 40%

By Angela McDaniels

Seattle, May 4 - Core Projects & Technologies Ltd. will price a $60 million issue of zero-coupon foreign-currency convertible bonds due 2012, according to a company notice filed with the Bombay Stock Exchange.

At the time of the announcement, the bonds were expected to price on Friday and settle on May 11.

The bonds will be issued at par and will be redeemed at 142.8% to 146.29% of par on maturity for a yield to maturity of 7.25% to 7.75% per year.

The bonds will be convertible into the company's ordinary shares, quoted in Indian rupees, and the conversion price is expected to be Rs. 828.59, which is a 40% premium over the closing share price of Rs. 591.85 on May 3.

Citigroup Global Markets is the bookrunner and has been granted a $20 million over-allotment option.

The bonds will be callable at their accreted principal amount beginning May 11, 2010 if they trade at 130% or more of their accreted principal amount for each of the 30 consecutive trading days before May 11, 2010.

The bonds are also putable on May 11, 2010.

The bonds will carry a reset feature, which will become active on May 11, 2008, Nov. 11, 2008 and May 11, 2009.

On a reset date, the initial conversion price will be reset to the average closing price of the shares over the preceding 15-day period if that average closing price is less than the initial conversion price.

The company noted that any adjustment to the conversion price will be limited so that the adjusted conversion price will not be less than 70% of the initial conversion price for the May 11, 2008 reset date, 50% for the Nov. 11, 2008 reset date and 40% for the May 11, 2009 reset date.

The board of directors approved the issuance of up to $80 million foreign-currency convertible bonds on Jan. 31 and, given the favorable market conditions, Core Projects said it decided to issue the bonds and to use the proceeds to fund acquisitions and for capital expenditure needs.

The Mumbai, India-based information technology products provider has applied to list the bonds on the Stock Exchange of Singapore and has received in-principal approval.

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