Singapore's Olam to sell $400 mln in conv bonds
Tue Sep 1, 2009 8:56pm EDT
* To use proceeds for acquisitions, corporate needs
* 7-year bonds could be upsized by another $100 mln
* Bond issue to reduce company debt - analyst
(adds use of proceeds, analyst comment, background)
SINGAPORE, Sept 2 (Reuters) - Singapore commodities firm Olam International (OLAM.SI) has agreed to sell at least $400 million in seven-year convertible bonds, the second of Singapore-listed corporates with a major bond issue in recent months.
CapitaLand (CATL.SI) raised S$1.1 billion ($762 million) through the sale of convertible bonds in July, signalling a comeback of convertible bond issuance in Asia amid a global recovery in stock markets.[ID:nSIN380899]
Olam said it plans to use the proceeds for acquisitions and general corporate needs.
One analyst, who covers Olam, said the move to issue convertible bonds was aimed at replacing debt with equity in the long-term. He said the company was also targeting upstream acquisitions in the commodities sector such as farming which requires more capital.
Olam's current equity base stands at approximately S$1.67 billion, with the total debt estimated at S$3.9 billion. Deutsche Bank estimates its total debt-to-equity ratio was 2.3 times before the issue of these bonds, relatively higher than its peers.
The size of the bonds, due for conversion in 2016, could be increased by another $100 million, Olam said in a statement on Wednesday.
The capital raising comes after Singapore state investor Temasek Holdings [TEM.UL] agreed to buy a 13.76 percent stake in Olam for $303 million in June. [ID:nSIN393305]
The bonds would carry a yield to maturity of 6 percent a year and have an initial conversion price of S$3.085 a share, 25 percent above the share's last closing price, Olam said.
"Olam is now very well positioned financially to move forward on its strategic objectives, allowing us to continue building on our leading competitive position in an attractive industry with strong growth prospects," CEO Sunny Verghese said in a statement.
JPMorgan (JPM.N) and Standard Chartered (STAN.L) are handling the deal.
Tue Sep 1, 2009 8:56pm EDT
* To use proceeds for acquisitions, corporate needs
* 7-year bonds could be upsized by another $100 mln
* Bond issue to reduce company debt - analyst
(adds use of proceeds, analyst comment, background)
SINGAPORE, Sept 2 (Reuters) - Singapore commodities firm Olam International (OLAM.SI) has agreed to sell at least $400 million in seven-year convertible bonds, the second of Singapore-listed corporates with a major bond issue in recent months.
CapitaLand (CATL.SI) raised S$1.1 billion ($762 million) through the sale of convertible bonds in July, signalling a comeback of convertible bond issuance in Asia amid a global recovery in stock markets.[ID:nSIN380899]
Olam said it plans to use the proceeds for acquisitions and general corporate needs.
One analyst, who covers Olam, said the move to issue convertible bonds was aimed at replacing debt with equity in the long-term. He said the company was also targeting upstream acquisitions in the commodities sector such as farming which requires more capital.
Olam's current equity base stands at approximately S$1.67 billion, with the total debt estimated at S$3.9 billion. Deutsche Bank estimates its total debt-to-equity ratio was 2.3 times before the issue of these bonds, relatively higher than its peers.
The size of the bonds, due for conversion in 2016, could be increased by another $100 million, Olam said in a statement on Wednesday.
The capital raising comes after Singapore state investor Temasek Holdings [TEM.UL] agreed to buy a 13.76 percent stake in Olam for $303 million in June. [ID:nSIN393305]
The bonds would carry a yield to maturity of 6 percent a year and have an initial conversion price of S$3.085 a share, 25 percent above the share's last closing price, Olam said.
"Olam is now very well positioned financially to move forward on its strategic objectives, allowing us to continue building on our leading competitive position in an attractive industry with strong growth prospects," CEO Sunny Verghese said in a statement.
JPMorgan (JPM.N) and Standard Chartered (STAN.L) are handling the deal.
