By Abigail W. Adams
Portland, Me., Nov. 29 – Semiconductor Manufacturing International Corp. priced $65 million in perpetual subordinate convertible securities to yield 2% with an initial conversion premium of 20%.
The convertible notes were issued alongside a placing agreement of 241,418,625 new shares at HK $10.65 per placing share.
J.P. Morgan is the sole global coordinator for the deal, with J.P. Morgan and Deutsche Bank acting as joint placing agents, and J.P. Morgan, Deutsche Bank and Barclays acting as joint bookrunners and managers, according to a company release.
The joint managers intend to sell $60 million of the convertible notes to Singapore-based GIC Private Ltd. and $5 million to Hong Kong-based Rays Capital Partners Ltd., according to a company release.
The convertible notes carry an initial conversion price of HK$12.78, which is subject to adjustment. The total offering of perpetual convertible notes will be convertible into 39,688,654 of placed conversion shares, according to a company release.
The notes are callable under a variety of circumstances, including beginning on Dec. 14, 2020 at par if the company’s shares trade at or above 130% of the conversion price taxation reasons as well as for accounting reasons, a credit rating event or a triggering event.
The notes have a put option exercisable at a “relevant event” such as the delisting or suspension of company shares on a stock exchange.
Datang Holdings and the China IC Fund, major shareholders of SMIC, intend to exercise their pre-emptive rights to the placing shares and perpetual subordinate convertible securities up to the amount they are entitled.
Datang also indicated it intends to subscribe for $100 million of further perpetual subordinated convertible securities, in addition to their pre-emptive right to the current issue, based on the same terms and conditions as the current issue.
China IC Fund has indicated it intends to subscribe for $300 million of further perpetual subordinated convertible securities, in addition to their pre-emptive right to the current issue, based on the same terms and conditions as the current issue.
Net proceeds from the placed share agreement and the placed perpetual subordinated convertible securities are expected to be $391 million. Net proceeds will increase to $969 million if Datang and China IC Fund exercise their preemptive rights and issue subscription securities, according to a company release.
Proceeds will be used for capacity expansion and other corporate purposes.
Semiconductor Manufacturing International is a Shanghai, China-based semiconductor foundry.
| Issuer: | Semiconductor Manufacturing International Corp.
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| Securities: | Subordinated convertible securities
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| Amount: | $65 million
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| Maturity: | Perpetual
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| Bookrunners: | J.P. Morgan, Deutsche Bank and Barclays
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| Coupon: | 2%
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| Conversion premium: | 20% over concurrent placement, 14.11% over closing stock price
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| Conversion price: | HK$12.78
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| Call options: | From Dec. 14, 2020 at par subject to 130% hurdle
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| Pricing date: | Nov. 29
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| Stock symbol: | NYSE: SMI, HK: 981
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| Stock price: | HK$11.20 as of Nov. 28 close, HK$10.65 for concurrent placement
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| Market capitalization: | HK$50.61 billion
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