Dry bulk specialist Pacific Basin to issue US$175 million debt

The cash coupon of the bonds is 3% a year and there is a December 2023 maturity date. Interest is payable semiannually in equal installments in arrears on June 10 and Dec. 10.

The bonds are convertible into equity from January 2020 to November 2025 at a price of HK$2.50 (US$0.32), which the company says is a 31.87% premium on the share price of HK$1.82 ($0.23) per share as of market close on Thursday, Oct. 31, 2019.

Converted shares will rank equally with all shares in issue. Bondholders will not have any rights to attend or vote at any shareholder meetings unless their bonds have been converted into shares.

Redemption and change of control

The company can redeem its bonds in whole, but not in part, at a price equal to the principal plus accrued but unpaid interest if the amount outstanding ever falls to less than 10% of the principal. Bondholders will have the right to compel the company to redeem the convertible bonds up to the full amount, plus any accrued but unpaid interest, as of Dec. 10, 2023 (i.e., at maturity).

If there is a change of control of the company, bondholders will have the right to have the company redeem the bonds in full, including any accrued but unpaid interest.

The bonds are near-freely transferable bar some restrictions on timing in the event of a limited number of matters, such as a conversion to equity notice being issued.

Lead managers

The Joint Lead Managers to the transaction are BNP Paribas, HSBC and DNB. BNP Paribas and HSBC have underwritten the bond to the tune of $70 million each, while DNB has agreed to $35 million. The underwriters have an over-allotment option, but there is no obligation on them to exercise that option.

Pacific Basin has over 500 customers and operates about 230 sea-going vessels, according to the release to the Hong Kong Stock Exchange. Of those vessels, 115 are owned. It employs about 3,800 seafarers, as well as 330 shore-based staff at 12 offices around the world.