Hong Kong: JSW Steel Ltd, India’s fourth- largest producer of the metal, raised $325 million selling convertible bonds, with a conversion premium of 50% to fund production expansion, according to a term sheet sent to investors on 30 May.
JSW Steel is capitalising on a nearly 65% increase in its share price this year and the term sheet said it would use the proceeds of the sale for capital expenditure.
JSW’s bonds have a conversion price of Rs953.40, compared with its National Stock Exchange closing price of Rs635.60 on 29 May, with one source saying the deal was more than 1.5 times subscribed.
The five-year, zero coupon convertibles have an annual yield-to-maturity of 7.25%, the term sheet said.
ABN Amro Rothschild and Citigroup are joint bookrunners on the deal, the term sheet said.
JSW is quadrupling its annual production capacity to 10 million metric tonnes by 2010 to meet growing demand for steel. India’s economy, Asia’s fourth-largest, expanded a record 9.2% in the year ended 31 March, according to government estimates.
JSW Steel will redeem the bonds at 142.8% of their face value if they’re not converted into shares before maturity, offering investors an annual yield of 7.25%, the term sheet shows.
The company’s shares more than doubled in the past 12 months, outpacing the 35 % gain of the benchmark Sensitive Index.
The company’s profit jumped 51% to 12.9 billion rupees for the year ended 31 March. Companies in India, including Reliance Communications Ltd, have sold $3.3 billion of equity-linked debt this year, about a fifth of the $17.3 billion market in the Asia-Pacific region.