Champion unit offers incentive to holders who convert 1% convertibles

By Angela McDaniels

Tacoma, Wash., Aug. 13 - Champion Real Estate Investment Trust said Fair Vantage Ltd. is offering an incentive to holders who convert their 1% guaranteed convertible bonds due 2013, which are convertible into Champion units.

Holders who submit applications to convert their bonds during the invitation period will receive an incentive payment equal to HK$2,215 for each HK$10,000 principal amount of bonds converted, according to an announcement from Champion.

The company said the incentive payment was determined taking into consideration

• The sum of the maturity redemption amount and remaining coupon payments that would otherwise have been payable to the bondholders, which is HK$12,494 for each $10,000 principal amount of bonds; and

• The notional value of the units issued upon conversion. Based on the HK$3.44 conversion price and a HK$3.536 average closing price of the units over the last five trading days, this value is HK$10,279 for each $10,000 principal amount of bonds.

The offer is limited to HK$2.75 billion principal amount of bonds (the "maximum invitation amount"), which represents about 60% of the HK$4,605,000,000 of outstanding bonds.

If the issuer receives applications for more than HK$2.75 billion of bonds, it will allocate the maximum invitation amount to those applications on a pro rata basis. The applications that exceed the limit will not be converted under the offer.

If the offer is fully subscribed, the incentive payment will total HK$609.1 million. The payment will be funded from Champion's cash balance.

The invitation period will end at 11 a.m. ET on Aug. 17. The results of the offer will be announced on Aug. 20, and the settlement date will be Aug. 24.

Great Eagle Holdings Ltd. owns 51.85% of Champion's units, and one of its subsidiaries holds some of the bonds. Champion said Great Eagle plans to apply for the conversion of some or all of those bonds. The maximum incentive payment payable for those bonds is HK$518.3 million.

Conversion price adjustment

Champion also announced that the conversion price will be changed to HK$3.40 per unit from HK$3.44 per unit. The change is expected to take effect on Oct. 9.

The adjustment must be made because the total distributable amount on each of Champion's units for the six months ended June 30, HK$0.1161, is more than 2.5% of the average closing price of one unit for the relevant measurement period.

Citigroup Global Markets Asia Ltd. is the dealer manager for the invitation.

Champion is a Hong Kong-based commercial REIT. It is managed by Eagle Asset Management (CP) Ltd.

© 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.