Champion gets applications to convert HK$2.34 billion 1% convertibles

By Angela McDaniels

Tacoma, Wash., Aug. 20 - Champion Real Estate Investment Trust said the holders of HK$2,340,400,000 principal amount of 1% guaranteed convertible bonds due 2013 issued by Fair Vantage Ltd. applied to convert their bonds.

As previously reported, Fair Vantage offered an incentive to holders who convert their bonds, which are convertible into Champion units.

Holders who submitted 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.

In total, the bondholders will receive 680.3 million Champion units and HK$518.4 million in cash.

Great Eagle Holdings Ltd. owns 51.85% of Champion's units, and one of its subsidiaries holds HK$2.34 billion of the bonds. Champion said Great Eagle applied to have all of these bonds converted. The incentive payment payable for those bonds was capped at HK$518.3 million.

Following settlement, HK$2,264,600,000 of bonds will remain outstanding.

The invitation period began Aug. 13 and ended at 11 a.m. ET on Aug. 17. The settlement date will be Aug. 24.

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 was limited to HK$2.75 billion principal amount of bonds, which represents about 60% of the HK$4,605,000,000 of outstanding bonds.

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

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

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