<TABLE border=0 cellSpacing=0 cellPadding=0 width=452><TBODY><TR><TD vAlign=top width=452 colSpan=2>Published September 3, 2009
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Olam selling convertible bonds worth US$400m
Proceeds will fund acquisitions and will be used for general corporate purposes
By CHEW XIANG
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COMMODITIES supplier Olam International yesterday said it is selling US$400 million in seven-year convertible bonds, just days after raising US$640 million in debt.
<TABLE class=picBoxL cellSpacing=2 width=100 align=left><TBODY><TR><TD>
</TD></TR><TR class=caption><TD>Mr Verghese: Olam International is unlikely to raise new equity or equity-linked instruments in the near term, says the company's CEO </TD></TR></TBODY></TABLE>The bonds have a coupon of 6 per cent and can be converted into Olam shares at an initial price of S$3.0853, a 25 per cent premium to the reference share price at the launch of the offering.
The estimated net proceeds of about US$392.5 million - assuming no exercise of an upsize option - will fund acquisitions and general corporate purposes, the company said in a statement.
On Tuesday, Olam paid NZ$14.37 million (S$13.9 million) cash for a 14.35 per cent stake in a New Zealand-listed dairy farming company.
Chief executive officer Sunny Verghese said the company is unlikely to raise new equity or equity-linked instruments in the near term.
JPMorgan analyst Ajay Mirchandani said: 'We believe the company would now move forward and continue to acquire more assets across the value chain (including upstream and downstream assets) in line with its target return on equity of 30 to 35 per cent.'
Olam said the offering could be increased by another US$100 million. Without the increase, the bonds would be convertible to about 186.7 million new shares, or about 8.6 per cent of the enlarged share base, according to Ben Santoso of DBS Vickers.
JPMorgan noted that Olam's current equity base stood at about S$1.67 billion, with the total debt estimated at S$3.9 billion, including the US$540 million raised last week in long-term debt.
Olam had secured US$540 million in a term loan from nine banks and also closed a 12-month US$100 million Islamic revolving trade finance facility.
JPMorgan said: 'While the total debt-to-equity as of today is approximately 2.3x, the net debt-to-equity is approximately 1.7x. Based on our discussions with the company, Olam has US$200 million debt due in end-10 and another US$354 million debt due in end-11.'
In its most recent financials released last week, Olam held S$294 million in cash and bank balances.
DBS Vickers' Mr Santoso said that assuming an issuance of US$400 million in bonds, together with US$300 million from a recent placement to Temasek Holdings, and a US$216 million five-year syndicated loan, Olam would have a war chest of US$916 million for long-term investment.
Last June, Olam sold US$300 million of convertible bonds, but later booked a one-off net gain of S$80.6 million from buying it back.
The one per cent bonds had been trading at as low as 46 cents on the dollar at the depths of the financial crisis.
Yesterday, Olam's share price fell as much as 8.1 per cent on the news, before closing at S$2.29, down 18 cents or 7.3 per cent.
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</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Olam selling convertible bonds worth US$400m
Proceeds will fund acquisitions and will be used for general corporate purposes
By CHEW XIANG
<TABLE class=storyLinks border=0 cellSpacing=4 cellPadding=1 width=136 align=right><TBODY><TR class=font10><TD width=20 align=right>
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</TD><TD>Feedback</TD></TR></TBODY></TABLE>COMMODITIES supplier Olam International yesterday said it is selling US$400 million in seven-year convertible bonds, just days after raising US$640 million in debt.
<TABLE class=picBoxL cellSpacing=2 width=100 align=left><TBODY><TR><TD>
</TD></TR><TR class=caption><TD>Mr Verghese: Olam International is unlikely to raise new equity or equity-linked instruments in the near term, says the company's CEO </TD></TR></TBODY></TABLE>The bonds have a coupon of 6 per cent and can be converted into Olam shares at an initial price of S$3.0853, a 25 per cent premium to the reference share price at the launch of the offering.The estimated net proceeds of about US$392.5 million - assuming no exercise of an upsize option - will fund acquisitions and general corporate purposes, the company said in a statement.
On Tuesday, Olam paid NZ$14.37 million (S$13.9 million) cash for a 14.35 per cent stake in a New Zealand-listed dairy farming company.
Chief executive officer Sunny Verghese said the company is unlikely to raise new equity or equity-linked instruments in the near term.
JPMorgan analyst Ajay Mirchandani said: 'We believe the company would now move forward and continue to acquire more assets across the value chain (including upstream and downstream assets) in line with its target return on equity of 30 to 35 per cent.'
Olam said the offering could be increased by another US$100 million. Without the increase, the bonds would be convertible to about 186.7 million new shares, or about 8.6 per cent of the enlarged share base, according to Ben Santoso of DBS Vickers.
JPMorgan noted that Olam's current equity base stood at about S$1.67 billion, with the total debt estimated at S$3.9 billion, including the US$540 million raised last week in long-term debt.
Olam had secured US$540 million in a term loan from nine banks and also closed a 12-month US$100 million Islamic revolving trade finance facility.
JPMorgan said: 'While the total debt-to-equity as of today is approximately 2.3x, the net debt-to-equity is approximately 1.7x. Based on our discussions with the company, Olam has US$200 million debt due in end-10 and another US$354 million debt due in end-11.'
In its most recent financials released last week, Olam held S$294 million in cash and bank balances.
DBS Vickers' Mr Santoso said that assuming an issuance of US$400 million in bonds, together with US$300 million from a recent placement to Temasek Holdings, and a US$216 million five-year syndicated loan, Olam would have a war chest of US$916 million for long-term investment.
Last June, Olam sold US$300 million of convertible bonds, but later booked a one-off net gain of S$80.6 million from buying it back.
The one per cent bonds had been trading at as low as 46 cents on the dollar at the depths of the financial crisis.
Yesterday, Olam's share price fell as much as 8.1 per cent on the news, before closing at S$2.29, down 18 cents or 7.3 per cent.
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