By William Gullotti
Buffalo, N.Y., July 21 – China’s Zhuhai Huafa Group Co., Ltd. subsidiary Huafa 2021 I Co. Ltd. priced an additional $100 million of 4¼% guaranteed perpetual capital securities (//BBB-) at 97.442, according to a listing notice with an appended offering circular on Thursday.
The offering will be consolidated with the initial $250 million of the perpetuals issued Aug. 18, 2021 and guaranteed by the parent company.
The initial distribution rate resets Aug. 18, 2024 at Treasuries plus the initial spread of 379.6 basis points plus an additional 300 bps margin, with subsequent rate resets occurring every three years.
Distribution payments may be deferred at the issuer’s option, which will subject the issuer to certain restrictions. A 3% margin increase will be applied to the distribution rate if a change of control, breach of covenants, relevant indebtedness default or a dividend stopper breach event occur until the event is cured or no longer exists.
The perpetuals may be redeemed at the issuer’s option at par plus interest starting on the first reset date and on any distribution date thereafter. Multiple triggering events exist, which may also cause an early redemption at any time, also at par plus interest, including tax reasons, accounting reasons, no registration, relevant indebtedness default, breach of covenants, dividend stopper or minimum outstanding amount.
Prior to the first reset date, holders will be able to put the notes at 101 plus interest if a change of control occurs. After the reset date, the change-of-control put option decreases to par plus interest.
Huajin International, Bocom International, GF Securities, Haitong International, China Industrial Securities International, Guotai Junan International, CNCB Capital and SMBC Nikko are the joint global coordinators, joint lead managers and joint bookrunners for the offering.
Also serving as joint lead managers and joint bookrunners are CMB International, China Galaxy International, CLSA, China International Capital Corp., Shenwan Hongyuan (H.K.) and ABC International.
Proceeds will be used to supplement offshore working capital and to refinance offshore debt.
The additional perpetuals will not be listed upon issue; however, permission to deal in the additional notes is expected to become effective three business days after the consolidation date.
The company is a conglomerate based in Zhuhai, China.
| Issuer: | Huafa 2021 I Co. Ltd.
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| Guarantor: | Zhuhai Huafa Group Co., Ltd.
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| Amount: | $100 million add-on
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| Issue: | Guaranteed perpetual capital securities
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| Maturity: | Perpetual
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| Bookrunners: | Huajin International, Bocom International, GF Securities, Haitong International, China Industrial Securities International, Guotai Junan International, CNCB Capital, SMBC Nikko, CMB International, China Galaxy International, CLSA, China International Capital Corp., Shenwan Hongyuan (H.K.) and ABC International
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| Trustee: | China Construction Bank (Asia) Corp., Ltd.
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| Counsel to issuer: | King & Wood Mallesons (England), GFE Law Office (China), Campbells (BVI)
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| Counsel to underwriters: | Ashurst Hong Kong (England), Zhong Lun Law Firm (China)
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| Coupon: | 4¼%; resetting on Aug. 18 2024, and at three-year intervals, to Treasuries plus 379.6 bps plus an additional 300 bps
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| Price: | 97.442 plus accrued interest from, and including, Feb. 18 up to, but excluding, June 8
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| Call features: | At the issuer’s option at par plus interest on any distribution date starting July 18, 2024; multiple conditional calls at par plus interest at any time triggered by tax reasons, accounting reasons, no registration, relevant indebtedness default, breach of covenants, dividend stopper or minimum outstanding amount
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| Change of control: | At 101 plus interest prior to July 18, 2024; at par plus interest on or after July 18, 2024
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| Pricing date: | May 31
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| Issue date: | June 8
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| Expected rating: | Fitch: BBB-
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| Distribution: | Regulation S
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| ISINs: | XS2463439690 (Temporary), XS2371895074 (initial, consolidated)
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| Original issue: | $250 million on Aug. 18, 2021
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