euNetworks plans to offer stock in exchange for 0% convertibles

By Angela McDaniels

Tacoma, Wash., March 15 - euNetworks Group Ltd. plans to hold an exchange offer for its S$86,427,903 of outstanding zero-coupon mandatory convertible bonds due April 1, 2013, according to a company announcement.

The company will offer new ordinary shares in exchange for the convertibles at an exchange price of S$0.015806, which is the same as the conversion price that would apply if the convertibles were mandatorily converted on their maturity date. It is a 1.2% discount to the S$0.016 weighted average trading price of the company's shares on March 14.

All convertibles tendered in the offer will be canceled.

Based on the outstanding principal amount of the convertibles, up to 5,468,043,970 shares will be issued in the exchange offer, which represents 31.9% of the company's issued share capital as of March 15.

The offer is subject to the receipt of approval in principle from the Singapore-Exchange Securities Trading Ltd. for the listing and quotation of the new shares. It is also subject to shareholder approval. Shareholders will vote at the annual general meeting on April 26.

The company said the holders of S$72,177,341 of the convertibles have agreed to tender their convertibles in the offer. The agreement will remain in place for nine months.

Offer rationale

Under the terms of the convertibles, the bondholders have the right to require the company to redeem for cash their convertibles at maturity at 126.53% of the unpaid principal amount.

The board is of the view that the current structure of the convertibles leaves a degree of uncertainty over whether redemption and repayment will be required at maturity, and euNetworks said this affects its ability to raise debt to fund the capital expenditure and working capital requirements for its business expansion.

CIMB Bank Bhd., Singapore Branch, is expected to be the manager for the exchange offer.

euNetworks is a Singapore-based subsidiary of Global Voice Group SA, a telecommunications carrier based in Port-au-Prince, Haiti.

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