Titan Petrochemicals plans to issue new convertibles, PIK notes in new 8½% notes exchange offer

By Jennifer Chiou

New York, April 23 - Titan Petrochemicals Group Ltd. said it is proposing a new exchange offer for its $315.36 million, or HK$2,444,040,000, of existing 8½% guaranteed senior notes due 2012.

On April 20, the company canceled the exchange offer for its 8½% notes after failing to meet the 90% minimum tender condition. The exchange began on Dec. 7.

There is now a 70% minimum tender condition.

In the planned new offer, Titan said it intends to issue $376 of new zero-coupon convertible notes due 2015 and $224 of new 5% pay-in-kind notes due 2015 for each $1,000 principal amount of existing notes.

In the prior offer, for each $1,000 principal amount of the existing notes, the company was offering $199 principal amount of new 8½% notes due 2015, 3,075 shares and $12.50 in cash.

Through the new offer, the company said it is seeking to preserve Titan Group's ability to continue as a going concern by reducing its debt servicing obligations and extending the maturity of its debt.

Titan said it may issue up to $118,575,360 of the convertibles and up to $70,640,640 of the PIK notes in the offer, which is expected to end at 5 p.m. ET on May 19.

Auction process

Those who tender their notes for exchange may elect to receive cash instead of the new notes in an auction process under which Titan expects to have $65 million available to pay out.

Holders electing this process must specify the minimum amount of cash they wish to receive in lieu of the new notes.

For each $1,000 principal amount of notes, the minimum price will be $640 and the maximum will be $800.

Consent solicitation

Titan is also soliciting consents to amend the indenture of the 8½% notes to eliminate substantially all of the restrictive covenants and all of the reporting requirements.

The amendments also will eliminate certain events of default.

New convertibles

The new convertibles will be convertible at a rate of 10,915 conversion shares per $1,000 principal amount of notes.

This rate makes for an initial conversion price of $0.0916, or about HK$0.7099, per share. This is an 18.4% discount to the HK$0.87 closing share price on April 23.

Assuming a maximum of $118,575,360 of convertibles is issued, conversion in full would result in the issue and allotment of up to 1,294,308,507 shares.

The notes will be subject to mandatory conversion if the company's stock price is at least 130% of the conversion price for at least 30 consecutive trading days.

Titan said it entered into a dealer manager agreement to appoint Goldman Sachs (Asia) LLC as the global coordinator, lead arranger and co-dealer manager and ING Bank NV, Singapore Branch as co-dealer manager.

The issuer is a Hong Kong-based trader of petrochemicals and oil products.

© 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.