Delong Hldg

Delong to sell 1.53b yuan of convertible bonds

Patricia Kuo

Tuesday, May 22, 2007

Delong Holdings, which makes hot- rolled steel coils in China, plans to sell as much as 1.53 billion yuan (HK$1.56 billion) of convertible bonds, according to a term sheet sent to investors.
Singapore-listed Delong will let investors exchange the five-year zero- coupon debt for its shares at S$4.455 (HK$22.83) apiece, 35 percent more than the price at the lunch break Monday, the term sheet shows. Citigroup is managing the debt sale.

Delong's shares have more than doubled in the past 12 months as the benchmark Straits Times Index gained 41 percent. Trading in Delong's shares was suspended starting from the lunch break. The stock rose 1.9 percent to S$3.30 Monday morning in Singapore.

Including Beijing-based Delong's convertible bond sale, companies in the Asia-Pacific region have raised US$16.3 billion (HK$127.14 billion) this year from equity-linked debt sales, 23 percent more than the same period of 2006.

Delong plans to redeem any bonds not converted at maturity for between 112.53 percent and 118.22 percent of face value, equal to an annual yield of as much as 3.375 percent.

The company initially plans to sell 1.34 billion yuan of bonds and can sell an additional 191 million yuan.

Delong is selling the bonds less than a week after Noble Group, a Singapore- listed supplier of raw materials, priced US$200 million of debt convertible into its shares at a 65 percent premium, the highest conversion rate for an equity- linked deal in Asia. Citigroup and JPMorgan Chase managed the deal.

Delong's first-quarter profit more than doubled to S$34.6 million from S$15 million a year on higher product prices and production. The company expects demand for steel in China to grow at 10 percent annually in the next two years. BLOOMBERG