China's Shui On announces terms of notes to be issued in exchanges

By Angela McDaniels

Tacoma, Wash., April 30 - Shui On Land Ltd. released the final key terms of the new notes it will issue in the exchange offer for its outstanding $875 million 9¾% senior notes and the exchange and tender offer for its outstanding RMB 3.5 billion dollar-settled 7 5/8% senior notes.

The four-year notes will carry an 8.7% coupon and mature May 19, 2018. They will be callable at any time in whole or in part at par plus the applicable premium. In addition, there will be an equity clawback for up to 35% of the notes at 108.7.

The six-year notes will carry a 9¾% coupon and mature May 19, 2020. They will be callable at par plus the applicable premium in years one through three, at 104.875 in year four, at 102.428 in year five and at 101.219 in year six. In addition, there will be an equity clawback for up to 35% of the notes at 109.75 during the first three years.

The new notes will be issued by wholly owned subsidiary Shui On Development (Holding) Ltd. and guaranteed by Shui On Land.

The issuer sold $178.9 million of the new 2018 notes at par and $87.02 million of the new 2020 notes at par on April 30 in a Regulation S offering. Standard Chartered Bank and UBS AG, Hong Kong Branch were the bookrunners.

The interest rate was expected to be at least 8½% for the new 2018 notes and at least 9¼% for the new 2020 notes.

Offer terms

The offers began April 14 and will expire at noon ET on May 12.

As previously reported, the consideration for each $1,000 principal amount of 9¾% notes exchanged will be $1,000 principal amount of new 2018 notes or $1,000 principal amount of new 2020 notes, an exchange premium of $45.00, accrued interest and an early participation payment, if applicable.

Holders who delivered instructions to exchange their 9¾% notes by noon ET on April 28 will receive an early participation payment of $7.50 per $1,000 of notes.

In other words, the theoretical exchange price for the 9¾% notes, excluding accrued interest, is 105.25 for notes exchanged before the early participation date and 104.5 for notes exchanged after the early participation date.

The consideration for each RMB 100,000 principal amount of 7 5/8% notes exchanged will be $16,261.50 of new 2018 notes or $16,261.50 of new 2020 notes, plus an exchange premium of $284.60, plus any fractional cash payment, plus any accrued interest and plus an early participation payment, if applicable.

The consideration for each RMB 100,000 principal amount of 7 5/8% notes tendered for purchase will be a cash amount of $16,546.10, plus an early participation payment, if applicable, and plus any accrued interest.

Holders who delivered instructions to exchange or sell their 7 5/8% notes by noon ET on April 28 will receive an early participation payment of $122.00 per RMB 100,000 of notes.

The considerations for the 7 5/8% notes, excluding accrued interest, result in theoretical exchange and tender prices of 102.5 for notes exchanged or tendered before the early participation date and 101.75 for notes exchanged or tendered after the early participation date. These theoretical prices are calculated based on a dollar per renminbi exchange rate of 6.1495.

Instructions to exchange or tender notes could be withdrawn until noon ET on April 28.

Settlement of the exchange offers is slated for May 19. Settlement of tendered 7 5/8% notes is expected to occur on May 20.

Early results

By noon ET on April 28, holders had tendered the following:

• $330.27 million of the 9¾% notes for exchange into new 2018 notes;

• $74.56 million of the 9¾% notes for exchange into new 2020 notes;

• $114.35 million of the 7 5/8% notes for exchange into new 2018 notes (the dollar amount being calculated using an exchange rate of $1 to RMB 6.1495);

• $38.47 million of the 7 5/8% notes for exchange into new 2020 notes; and

• $213.74 million of the 7 5/8% notes for cash.

Offer conditions

The tender offer for the 7 5/8% notes is conditioned on the closing of at least one concurrent offering, which has been satisfied.

In the event that the amount raised in the concurrent issue is less than the consideration payable for tendered 7 5/8% notes, the issuer will pro-rate the 7 5/8% notes tendered for purchase.

The issuer said it will not issue any new 2020 notes if the total amount of new 2020 notes - issued under the exchange and tender offers and the concurrent offering - is less than $200 million.

If no new 2020 notes are issued, holders who elected to receive 2020 notes under either exchange offer will receive 2018 notes instead. If the issuance condition for the 2018 notes (described below) is not satisfied either, holders will retain their old notes and will not receive any consideration under the exchange offers.

The issuer said it will not issue any new 2018 notes if the total amount of new 2018 notes - issued under the exchange and tender offers and the concurrent offering - is less than $200 million.

If no 2018 notes are issued, holders who elected to receive 2018 notes, or would have received 2018 notes instead of 2020 notes, will retain their old notes and will not receive any consideration under the exchange offers.

The company said the purpose of the exchange and tender offers and the concurrent issuance is to extend the maturity of a portion of its debt due in 2015.

Standard Chartered Bank and UBS are the dealer managers. D.F. King & Co., Inc. (+44 207 920 9700 or 212 269-5550, attn.: Damian Watkin/Katerina Papamichael, Sol@king-worldwide.com) is the information and exchange and tender agent.

Shui On Land is a Shanghai-based property development company and a member of Hong Kong-based Shui On Group.

© 2015 Prospect News.
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