Sappi talks ZAR 1.75 billion five-year convertible bonds to yield 5%-5.5%, up 30%-35%

By Abigail W. Adams

Portland, Me., Nov. 18 – Sappi Southern Africa Ltd. plans to price ZAR 1.75 billion five-year convertible bonds on Wednesday with price talk for a coupon of 5% to 5.5% and an initial conversion premium of 30% to 35%, according to a market source.

Rand Merchant Bank is global coordinator and bookrunner for the Regulation S offering. Morgan Stanley & Co. International plc is also a bookrunner.

The company will convene a shareholder meeting by Feb. 28, 2021 for approval of the shares issued as part of the conversion rights of the bonds.

Prior to shareholder approval, the company may redeem the full principal amount of the bonds at 102 plus accrued interest.

The bonds are non-callable for three-years and then subject to a 130% hurdle.

They are putable upon a change-of-control or delisting event.

Proceeds will be used to fund capital expenditures, in particular to expand the production capacity at the company’s Saiccor mill in Umkomaas, South Africa.

Sappi is a Johannesburg-based pulp and paper company.

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