China's Shui On completes tender, exchange offers for two notes series

By Jennifer Chiou

New York, May 12 - Shui On Land Ltd. announced the final results of the exchange offer for its $875 million of 9¾% senior notes and exchange and tender offer for its RMB 3.5 billion dollar-settled 7 5/8% senior notes.

The offers began on April 14 and expired at noon ET on May 12.

Overall, holders tendered the following:

• $417.79 million of the 9¾% notes for exchange into new 2018 and 2020 notes;

• $155.93 million of the 7 5/8% notes for exchange into new 2018 and 2020 notes (the dollar amount being calculated using an exchange rate of $1 to RMB 6.1495); and

• $219.55 million of the 7 5/8% notes for cash.

New notes' details

As reported, the four-year notes will carry an 8.7% coupon and mature May 19, 2018. They will be callable at any time in whole or in part at par plus the applicable premium. In addition, there will be an equity clawback for up to 35% of the notes at 108.7.

The six-year notes will carry a 9¾% coupon and mature May 19, 2020. They will be callable at par plus the applicable premium in years one through three, at 104.875 in year four, at 102.428 in year five and at 101.219 in year six. In addition, there will be an equity clawback for up to 35% of the notes at 109.75 during the first three years.

The new notes will be issued by wholly owned subsidiary Shui On Development (Holding) Ltd. and guaranteed by Shui On Land.

The issuer sold $178.9 million of the new 2018 notes at par and $87.02 million of the new 2020 notes at par on April 30 in a Regulation S offering. Standard Chartered Bank and UBS AG, Hong Kong Branch were the bookrunners.

The interest rate was expected to be at least 8½% for the new 2018 notes and at least 9¼% for the new 2020 notes.

According to a filing with the Hong Kong Stock Exchange, the issuer will sell $178.98 million of new 2018 notes in the concurrent new issue and issue $458,047,000 of new 2018 notes pursuant under the exchange offer for the two existing series of notes, for an aggregate principal amount of $637,027,000 of new 2018 notes.

The company will also issue $87.02 million of new 2020 notes in the concurrent new issue and issue and issue $115,467,000 of the 2020 notes in the exchange offer, for an aggregate of $202,487,000 of new 2020 notes.

Offer terms

Settlement is anticipated on May 20.

The consideration for each $1,000 principal amount of 9¾% notes exchanged will be $1,000 principal amount of new 2018 notes or $1,000 principal amount of new 2020 notes, an exchange premium of $45.00, accrued interest and an early participation payment, if applicable.

Holders who delivered instructions to exchange their 9¾% notes by noon ET on April 28 will receive an early participation payment of $7.50 per $1,000 of notes.

As noted, the theoretical exchange price for the 9¾% notes, excluding accrued interest, is 105.25 for notes exchanged before the early participation date and 104.5 for notes exchanged after the early participation date.

The consideration for each RMB 100,000 principal amount of 7 5/8% notes exchanged will be $16,261.50 of new 2018 notes or $16,261.50 of new 2020 notes, plus an exchange premium of $284.60, plus any fractional cash payment, plus any accrued interest and plus an early participation payment, if applicable.

The consideration for each RMB 100,000 principal amount of 7 5/8% notes tendered for purchase will be a cash amount of $16,546.10, plus an early participation payment, if applicable, and plus any accrued interest.

Holders who delivered instructions to exchange or sell their 7 5/8% notes by noon ET on April 28 will receive an early participation payment of $122.00 per RMB 100,000 of notes.

The considerations for the 7 5/8% notes, excluding accrued interest, result in theoretical exchange and tender prices of 102.5 for notes exchanged or tendered before the early participation date and 101.75 for notes exchanged or tendered after the early participation date. These theoretical prices are calculated based on a dollar per renminbi exchange rate of 6.1495.

Instructions to exchange or tender notes could be withdrawn until noon ET on April 28.

By the early deadline of noon ET on April 28, holders had tendered the following:

• $330.27 million of the 9¾% notes for exchange into new 2018 notes;

• $74.56 million of the 9¾% notes for exchange into new 2020 notes;

• $114.35 million of the 7 5/8% notes for exchange into new 2018 notes (the dollar amount being calculated using an exchange rate of $1 to RMB 6.1495);

• $38.47 million of the 7 5/8% notes for exchange into new 2020 notes;

• $213.74 million of the 7 5/8% notes for cash.

Offer conditions

The tender offer for the 7 5/8% notes was conditioned on the closing of at least one concurrent offering, which was previously been satisfied.

The issuer said it would not issue any new 2018 notes if the total amount of new 2018 notes - issued under the exchange and tender offers and the concurrent offering - was less than $200 million.

The company said the purpose of the exchange and tender offers and the concurrent issuance was to extend the maturity of a portion of its debt due in 2015.

Standard Chartered Bank and UBS were the dealer managers. D.F. King & Co., Inc. (44 207 920 9700 or 212 269-5550, attn.: Damian Watkin/Katerina Papamichael, Sol@king-worldwide.com) was the information and exchange and tender agent.

Shui On Land is a Shanghai-based property development company and a member of Hong Kong-based Shui On Group.

© 2015 Prospect News.
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