Sika allots CHF 315 million 0.15% seven-year convertibles for subscription rights

By Susanna Moon

Chicago, May 29 – Sika AG said it allocated CHF 1,335,000,000 of its 0.15% seven-year convertible bonds to institutional investors and CHF 315 million to investors who exercised their advance subscription rights.

As reported, Sika priced an upsized CHF 1.65 billion issue of the convertibles on May 15 at par and an initial conversion premium of 40%.

Existing shareholders had advance subscription rights to the bonds with each holder of 1 bearer share worth CHF 0.60 given 6 rights and each holder of 1 registered share worth CHF 0.10 given 1 right with 185 rights needed to purchase a convertible bond at the issue price.

As of 6 a.m. ET on May 28, investors had exercised 2,917,820 advance subscription rights, corresponding to 15,772 bonds, or 19.12% of the total issue size, according to a company update on Tuesday.

Under the clawback, the amount was reduced on a pro rata basis for allocations to the institutional investors who participated in the bookbuilding on May 15.

Settlement is expected to occur on June 5, and the bonds are expected to begin trading on the SIX Swiss Exchange on June 1.

The issuer said it has agreed to a 90-day lock-up period from the settlement date.

The exercise period for the rights was from May 18 to May 28. Bonds for which subscription rights have been exercised were to be deducted pro rata from the allocation.

The notes are non-callable for five years and then may be redeemed at par subject to a 130% hurdle.

The bonds are convertible into new or existing shares on the earlier of the 10th trading day after the registration of resolutions passed at an extraordinary general meeting of shareholders or the third trading day following the end of the fair market call period.

If a single class of registered shares is not approved at the general meeting, the company may redeem the bonds at the greater of either 102% of the issue price or 102% of the fair bond value.

The issuer has an A- credit rating from S&P Global Ratings, and the bonds were rated in line with that, the release noted.

Proceeds will be used to refinance the acquisition of Sika shares from Compagnie de Saint-Gobain and for general corporate purposes.

UBS is the global coordinator and bookrunner for the Regulation S deal.

The initial size of the deal had been CHF 1.5 billion.

Price talk had been for an issue price of par to 101, a coupon of 0% to 0.3% and an initial conversion premium of 40% to 45%.

Sika is a Baar, Switzerland-based specialty chemicals company.

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