Bong refinances bank debt, will convert convertible bonds on Feb. 8

By Angela McDaniels

Tacoma, Wash., Jan. 29 – Bong AB has repurchased some bank debt with the proceeds of its recent high-yield bond offering and will force conversion of its convertible bonds on Feb. 8, according to a company news release.

As previously reported, the company is pursuing a debt restructuring that includes the repurchase of its two main lending banks’ claims on the company, the completion of a bond issue, conversion of the company’s convertible bonds into equity and issues of shares and subscription warrants.

Convertible bonds

All of the company’s convertible bonds, series 2013/2018, will be converted at a conversion price of SEK 2.75 per share, which provides the convertible bondholders with a total of 27,272,727 shares in Bong.

The conversion will be executed by Euroclear with Feb. 4 as the record date. The company expects the distribution of shares to be made on Feb. 8.

The convertible bondholders are also entitled to subscribe for a total of 9,999,975 shares in Bong through a directed issue at a subscription price of SEK 1.00 per share. The subscription may be made until April 28.

The company received holder approval to force the conversion at a bondholder meeting on Jan. 19.

Bond issue

As previously reported, the company issued SEK 200 million of 10% three-year senior secured bonds on Dec. 21.

Bong will not declare any dividends during the life of the bonds.

The bondholders will now receive 50,000 subscription warrants and 28,935 shares per bond. The three-year warrants have an exercise price of SEK 1.15 per share.

In total, 40 million subscription warrants have been issued.

The proceeds of the bonds were used to purchase the banks’ claims.

Acquisition of bank facilities

Bong acquired the banks’ claims on the company for SEK 195 million of cash.

The banks also received 27,272,727 Bong shares through a set-off issue against part of the claims.

The banks transferred about 23 million shares to the holders of the company’s bonds that were issued on Dec. 21.

The banks are entitled to subscribe for a total of 10 million shares in Bong through a directed issue at a subscription price of SEK 1.00 per share. The subscription may be made until April 28.

Effects of transactions

The company said the transaction has resulted in an increase of equity and a reduction of interest-bearing debt by about SEK 500 million.

Interest costs have decreased by about SEK 10 million per year as a result of the lower debt burden.

If the directed share issues are subscribed for in full and full subscription of shares through exercise of the issued subscription warrants is made, SEK 70 million will be added to the equity of the company.

Bong makes specialized packaging and envelope products and is based in Kristianstad, Sweden.

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