IFR Asia – September 30, 2017

Clauses allowing redemption
at the bondholders’ option are
fairly common in other bond
agreements, but several specify
a timeline for the suspension
whereas that in the Ezion
agreement does not.
A group of investors
holding PACIFIC ANDES RESOURCES
DEVELOPMENT ’s S$200m
(US$139m) 8.5% bonds due 2017
relied on a similar redemption
clause to demand payment
in January last year. Pacific
Andes subsequently filed for
protection under Chapter 50 of
the Singapore Companies Act.

DBS OBLIGATIONS
“What we probably have here
is a bondholder trying to take
advantage of a lifeline provided
by DBS, just in case Ezion
ultimately is unable to pay,”
said a Singapore-based lawyer.
“It would be interesting to
see if DBS would honour its
obligations if Ezion said it can’t
pay up.”
Analysts and bankers said
DBS would risk reputational
damage if it chose not to
honour its obligation, should

the situation call for it.

Ezion, which faces tight

liquidity amid a protracted

downturn in the oil industry,

suspended its shares on August

14 while it held talks with

creditors and stakeholders

about its financing and capital

structure.

It is due to hold an informal

meeting with all bondholders,

except those holding the DBS-

backed bond, on Monday. A

separate meeting with the

latter group of investors is

planned but no date has been

set yet, the company said.

Ezion also plans to set up two

informal steering committees

with the assistance of the

Securities Investors Association

(Singapore) to represent

bondholders, with the

exception, again, of investors

holding the DBS-backed bond.

Ezion has six other existing

bonds – a S$110 4.7% note due

2019, S$60m 4.6% note due

2018, S$50m 4.85% note due

2019, S$55m 5.1% note due 2020,

S$150m 4.875% note due 2021

and S$150m 7% subordinated

perpetual securities. „

Vincom IPO aims for

speed and size

„ Equities Record private-sector float comes with shortest

settlement period

BY S ANURADHA, FIONA LAU

Vietnamese mall operator

VINCOM RETAIL last week started

premarketing an IPO that

promises to be both the biggest

and fastest in the country’s

stock market.

Vincom, the retail unit of

Vingroup, Vietnam’s largest

developer, is looking to list

on the Ho Chi Minh Stock

Exchange in a deal that could

fetch as much as US$600m, a

record for the country’s private

sector.

Pricing is scheduled for

October 26 and the shares

are set to begin trading on

November 6, according to a

term-sheet obtained by IFR.

A gap of less than two

weeks between pricing and

listing is much shorter than

the two-month delay that

previous private-sector IPOs

have endured. The D3.78trn

(US$166m) IPO of VietJet

Aviation, the country’s largest

private-sector listing so far,

priced on December 13 last

year, but the shares only started

trading on February 28.

The stock exchange is in

favour of a shorter lag time

as it works to attract foreign

investors.

“For a deal of this size

in Vietnam, we need the

participation of international

investors, even non-frontier

market investors, to get it

done. A two-week settlement

will solve the problem of some

investors,” said a banker on the

IPO.

The VietJet float did attract

foreign buyers, but the long

delay limited participation.

Fund managers are watching

Vincom with interest, noting

that Vietnam has the second

best-performing stock market

in Asia so far this year, with the

benchmark VN Index up 21%

year to date.

“Now, with a shorter

settlement period, we will

definitely look at the Vincom

IPO. Vietnam’s retail companies

enjoy high growth and

Vincom can be a good bet at a

reasonable valuation,” said a

hedge fund manager in Hong

Kong.

The deal will also have a

cornerstone tranche, a rarity in

local IPOs.

“Many high-quality

investors have engaged in the

cornerstone process. Interest

is high from a number of

sovereign wealth funds,

frontier-market investors and

long-only investors,” said the

banker.

“Vietnam is actually on the

list for a lot of investors, but

you can’t usually get good size

of exposure. The Vincom deal

will generate huge amount

of interest if the valuation is

sensible.”

The last IPO of a similar size

in Vietnam was the D10trn IPO

in 2007 of Bank for Foreign

Trade of Vietnam, also known

as Vietcombank. At the current

exchange rate, Vincom’s

US$600m target would surpass

that record in local currency

terms.

It is understood the company

is looking at a market

capitalisation of about US$3bn

to US$4bn. Only secondary

shares will be sold. The term-

sheet does not mention the

vendors, but private equity firm

Warburg Pincus and Vingroup

are expected to sell the shares.

Warburg Pincus invested

US$200m in Vincom in 2013

and another US$100m in 2015.

Premarketing is set to end on

October 10 before books open

on October 16–26.

Citigroup , Credit Suisse and

Deutsche Bank are the joint

global coordinators and

bookrunners with Saigon

Securities. „

For daily news stories

visit http://www.ifrasia.com

relationship bank investors did
not ask for yields as high as 9%.
In the domestic bond
market, APP-China’s funding
cost is much cheaper. In mid-
September, Gold HongYe Paper
Group, a subsidiary of APP-
China’s mainland unit, Sinar
Mas Paper (China) Investment,
printed Rmb500m two-year
notes at par to yield 6.97%.
The controversial name
polarised views in the market.
One investor was heard to have
complained to the arrangers of
poor due diligence.
“Yes, we heard many
different opinions [on this
credit] and we understood that
a lot of investors were cautious
towards APP-China this
time, given its complex past,
but APP-China has evolved
significantly over the years,”
said the banker.
“Sixteen years ago, investors
looked at the Indonesian family
when buying its bonds. Today,
the story is about its business

development in China.”

Since launching its first joint

venture in China in 1992, APP-

China has become the country’s

largest producer of non-carbon

paper, coated white board and

pulp.

The notes are to be issued

via British Virgin Islands-

incorporated Green Fortune

Capital, with Hong Kong-

incorporated Ever Dragon

Investments Group as

guarantor. Both are subsidiaries

of Bermuda-incorporated APP-

China Group.

Indonesia’s Widjaja family,

which controls the Sinar Mas

Group and Asia Pulp & Paper,

owns a 48.9% stake in APP-

China.

Bank of China (Hong Kong) and

China Citic Bank International

were joint global coordinators.

The two banks were also joint

bookrunners and joint lead

managers with China Everbright

Securities (HK) and Industrial Bank ,

Hong Kong branch. „