Sino Energy extends convertibles, pays 7.5% rate from maturity

By Susanna Moon

Chicago, Jan. 18 – Sino Energy International Holdings Group Ltd. said it amended the terms of its convertible bonds due Dec. 27, 2018 to push out the maturity to April 27, 2019.

Also, interest from the maturity date will be 7.5% per year on the outstanding principal amount of the convertibles.

The company, the subscriber and the guarantors have entered into the supplemental agreement for the proposed amendments on Friday.

The convertibles would have matured on Oct. 27, which would have required the company to deploy its cash reserves to redeem them, the company explained in an announcement.

“The proposed amendments in effect allow the company to refinance its debts under the convertible bonds on normal commercial terms, and enables the company to retain the funds for general working capital and to finance any potential investments opportunities as and when opportunities arise,” the release said.

“In addition, the directors are of the view that the issue of convertible bonds represents a good opportunity for the group to raise additional capital, and would allow the company to increase its capital base and widen its shareholder base, if the holder of the convertible bonds converts its convertible bonds into the conversion shares.”

The amended conversion price will be HK$0.20 per conversion share, which is a premium of 100% to the closing price of HK$0.10 per share on Jan. 18; a premium of about 89.04% to the average closing price of HK$0.1058 per share for the last five consecutive trading days immediately before the date of the supplemental agreement; and a premium of about 92.49% to the average closing price of HK$0.1039 per share for the last 10 consecutive trading days immediately before the date of the supplemental agreement, according to a notice.

The amended conversion price was determined after arm’s length negotiations between the company and the subscriber, the release noted.

The net issue price is about HK$0.198 per conversion share.

Based on the amended conversion price of HK$0.20, a maximum number of 500 million conversion shares would be issued upon exercise of all the conversion rights.

Unless the subscriber exercises the conversion rights before first extended maturity date or second extended maturity date, the company will redeem the convertibles and repay to the subscriber on the first extended maturity date or second extended maturity date a price of par plus a sum that will give the subscriber an annualized return of 18% on the principal amount of the convertibles to be redeemed.

The annualized return of 12% for the period running from the issue date of the convertibles to maturity in the sum of HK$8.25 million remains unchanged.

The subscriber is a company incorporated in Hong Kong with limited liability and principally engaged in investment activities, the release noted.

The subscription agreement dated Dec. 16, 2016 entered into with the subscriber was for HK$100 million principal amount of the convertibles.

Sino Energy is a Shishi, China-based investment holding company principally engaged in the casual footwear business. The company also engages in operating gas stations and trading of grains.

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