of the optional management
stake of 10%, to be bought
from senior creditors, from
time to time. The option will
be exercisable in stages within
five years of the completion of
the restructuring, at an exercise
price that puts the total value
of the shares at US$85m.
Noble’s management will be
able to subscribe to a further
5% stake in the new company,
exercisable within five years,
subject to its achieving a
market capitalisation of
approximately US$2.1bn. The
current market capitalisation is
around S$200m (US$153m).
The exercise price for the
optional 5% stake will be set to
value it at a total of US$110m,
and half of it will be available
to other shareholders for
subscription. That means
Noble’s management and
existing shareholders could
each end up with a 15%
stake on completion of the
restructuring and more in
future if the share price rose
dramatically.
Goldilocks remained
unconvinced, calling the
revised terms “window-
dressing” in a strongly worded
statement last Thursday.PERPETUAL PUSHBACK
Holders of Noble’s subordinated
perpetual capital securities
had pushed back against an
earlier offer that would have
given them US$15m in value,
equivalent to under 4 cents on
the dollar.
A group of perp holders on
Monday had offered to provide
a trade finance facility to
Noble if the perps were given
improved treatment under a
restructuring scheme.
The group said it would
provide a US$700m four-
year trade finance facility at
“considerably lower cost” than
the facility Noble’s senior
unsecured creditors had
suggested under the current
proposal, although it did not
state the terms of the facility.
Pinpoint Asset Management,
a hedge fund based in Hong
Kong and Shanghai, sent the
release on behalf of the group,the other members of which
were not identified.
“In exchange, the ad hoc
group seeks fair treatment
of its claims in the Noble
restructuring process,” said the
release.
The pressure may have
played a part in earning a
better offer for the perpetual
securities in the revised
restructuring proposal.
Under the new offer, they
can exchange them for a new
US$25m non-accumulative
pay-if-you-can perpetual capital
instrument to come from the
new Noble entity. The new
offer works out to 6.25 cents on
the dollar.
However, holders of the
perps have very little room for
negotiation. If senior creditors
and shareholders approve the
scheme and perp holders veto
the new securities offer, Noble’s
assets will be moved into a new
vehicle, and perp investors
will be left holding perpetual
securities issued by an entity
with no assets or cashflow.
Failure to pay coupons on theold perps would prevent Noble
from paying share dividends
from the empty shell, but not
from the new company.
Noble expects to hold
a consent solicitation and
exchange offer for the existing
perpetual securities in early
May. Senior creditors will vote
on the scheme in mid-June,
with the restructuring expected
to become effective in mid-to-
late July if approved.
The commodities trader
missed a coupon payment
on its US$750m 8.75% 2022
bonds on March 9 and has a
30-day grace period before
payment can be accelerated,
while it has a US$379m
bond maturing on March 20.
Typically, restructuring support
agreements have conditions
preventing the participants
from making claims against the
issuer.
Houlihan Lokey is adviser
to the ad hoc group of
senior creditors. PJT Partners,
Comprador and Moelis are
financial advisers to the
company. For daily news stories
visit http://www.ifrasia.comSo far, not many Chinese
SOEs have tapped the euro
bond market. Among those that
have issued euro bonds, some
were driven by business needs,
including M&A in Europe,
such as ChemChina, CGNPC
and State Grid Corporation of
China.
Others, such as Gansu
Provincial Highway Aviation
Tourism Investment Group and
Shougang Group, do not have
much need for euros as their
businesses are still concentrated
in mainland China.
Tianjin Rail plans to
use proceeds to finance
Green projects or assets as
defined in its Green bond
framework, such as low-carbon
transportation.
Rail Transit International
Development is the issuer of
the Reg S notes and Tianjin Rail
Transit Group (Hong Kong) the
guarantor.
The notes will have the
benefit of a keepwell and
liquidity support deed and a
deed of equity interest purchase
undertaking from ultimate
parent Tianjin Rail.
The senior unsecured bondshave expected Baa1/A ratings
(Moody’s/Fitch).
HSBC, ICBC International,
Standard Chartered Bank and ABC
International were joint global
coordinators on the Tianjin
Rail deal. They were also joint
bookrunners and joint lead
managers with CCB International,
Bank of China and Wing Lung Bank.
HSBC was the green
structuring adviser.
On the Xingcheng
Investment issue, CICC and
Societe Generale were joint
global coordinators, as well as
joint bookrunners with ChinaMinsheng Banking, Hong Kong
branch, ICBC Asia and SPD Bank
Singapore.
Xingcheng Investment
has businesses in primary
land development,
urban development, city
infrastructure construction and
affordable housing.
Proceeds from the Reg S
issue will be used for general
corporate purposes, including
investments in onshore project
development and refinancing
existing debt. The notes have
an expected BBB+ rating from
Fitch.