Titan terminates latest offer to issue convertibles, PIK notes for 8½% notes; new exchange possible

By Jennifer Chiou

New York, May 19 - Titan Petrochemicals Group Ltd. announced the termination of the new exchange offer for its $315.36 million, or HK$2,444,040,000, of existing 8½% guaranteed senior notes due 2012.

That offer was announced on April 23.

On April 20, the company canceled the exchange offer for its 8½% notes after failing to meet the 90% minimum tender condition. That exchange began on Dec. 7.

There was a 70% minimum tender condition for the subsequent offer.

Titan said that it may launch a new exchange for the notes.

In the most recent offer, Titan said it intended to issue $376 of new zero-coupon convertible notes due 2015 and $224 of new 5% pay-in-kind notes due 2015 for each $1,000 principal amount of existing notes.

In the prior offer, for each $1,000 principal amount of the existing notes, the company was offering $199 principal amount of new 8½% notes due 2015, 3,075 shares and $12.50 in cash.

Through the new offer, the company said it was seeking to preserve Titan Group's ability to continue as a going concern by reducing its debt servicing obligations and extending the maturity of its debt.

Titan had said it would issue up to $118,575,360 of the convertibles and up to $70,640,640 of the PIK notes in the April offer, which was slated to end at 5 p.m. ET on May 19.

The company said it has been in discussions with an ad hoc group of holders, and it added that it may start the new exchange offer assuming it signs a dealer manager agreement.

Ended auction process

Those who tendered their notes for exchange could have elected to receive cash instead of the new notes in an auction process under which Titan expected to have $65 million available to pay out.

Holders electing this process were to specify the minimum amount of cash they wished to receive in lieu of the new notes.

For each $1,000 principal amount of notes, the minimum price was to be $640 and the maximum was to be $800.

Consent solicitation

Titan had also been soliciting consents to amend the indenture of the 8½% notes to eliminate substantially all of the restrictive covenants and all of the reporting requirements.

The amendments were to eliminate certain events of default.

New convertibles

The new convertibles were to be convertible at a rate of 10,915 conversion shares per $1,000 principal amount of notes.

This rate made for an initial conversion price of $0.0916, or about HK$0.7099, per share. This was an 18.4% discount to the HK$0.87 closing share price on April 23.

Assuming a maximum of $118,575,360 of convertibles had been issued, conversion in full would have resulted in the issue and allotment of up to 1,294,308,507 shares.

The notes would have been subject to mandatory conversion if the company's stock price is at least 130% of the conversion price for at least 30 consecutive trading days.

Titan had said it entered into a dealer manager agreement to appoint Goldman Sachs (Asia) LLC as the global coordinator, lead arranger and co-dealer manager and ING Bank NV, Singapore Branch as co-dealer manager.

The issuer is a Hong Kong-based trader of petrochemicals and oil products.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.