By Angela McDaniels
Tacoma, Wash., Dec. 31 - China Natural Gas, Inc. agreed to issue up to RMB 300 million of guaranteed senior notes due January 2014 to Abax Lotus Ltd., according to an 8-K filing with the Securities and Exchange Commission.
The investor has the option to purchase up to RMB 75 million of additional notes within 30 days of settlement.
The notes will bear interest at 5% per year. The coupon will increase to 8% if the company has not listed its stock on the Nasdaq Global Market, Nasdaq Capital Market or New York Stock Exchange within one year of issue, and the coupon will increase by 3% each year until the listing is obtained.
The notes will be callable beginning six months after issue at 108% of par. The call price will decline to 106% of par in 2010, to 104% of par in 2011, to 102% of par in 2012 and to par in 2013.
The company will also issue seven-year warrants to the investor. The warrants will be exercisable for up to 2.9 million shares at an initial exercise price equal to 120% of the volume-weighted average price of the company's common stock for the 15 trading days prior to issuance.
The notes' coupon will increase by 1% if the registration statement for the shares underlying the warrants is not declared effective within 150 days of issuance, and the coupon will increase by 1% every 90 days until the registration statement is declared effective.
In connection with the notes and warrants, the company will grant the investor a pledge of 65% of the company's equity interest in Shaanxi Xilan Natural Gas Equipment Co., Ltd. and the investor will be entitled to appoint one of the company's directors.
China Natural Gas is a natural gas exploration company based in Xian, China.
| Issuer: | China Natural Gas, Inc.
|
| Issue: | Guaranteed senior notes
|
| Amount: | RMB 300 million
|
| Greenshoe: | RMB 75 million
|
| Maturity: | January 2014
|
| Coupon: | 5%
|
| Price: | Par
|
| Call: | At 108 beginning six months after issue, then at 106 in 2010, 104 in 2011, 102 in 2012 and par in 2013
|
| Warrants: | For up to 2.9 million shares
|
| Warrant expiration: | Seven years
|
| Warrant strike price: | 120% of volume-weighted average price of stock for 15 days prior to issue
|
| Investor: | Abax Lotus Ltd.
|
| Announcement date: | Dec. 30
|
| Settlement date: | Jan. 31
|
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