Kinh Bac City Development Holding Company, listed on the HCM City Stock Exchange, will issue US$200 million worth of convertible bonds overseas in accordance with an agreement signed last week with Credit Suisse.
The bonds will have a five-year maturity and an annual interest rate of 6-6.2 percent.
They will be converted into shares at a projected value at 130 percent of the average price during 10-15 continuous trading sessions prior to the issue date.
Credit Suisse, Switzer-land’s second largest bank, will be the issuing underwriter for Kinh Bac’s bonds.
"This is the first time Kinh Bac has issued international bonds," company chairman Dang Thanh Tam told Viet Nam News, revealing that Credit Suisse took the initiative to offer the collaboration.
"Credit Suisse is a strong, internationally prestigious financial consortium with a lot of business experience in Viet Nam," Tam said.
"They studied KBC carefully and found it qualified to issue bonds overseas."
The bank had already secured buyers for the bonds and would carry out the issue soon, after which they would be listed on the Hong Kong Stock Exchange or another suitable market, Tam said.
The capital raised through the issue would be invested in infrastructure development of industrial zones and real estate projects in 2010, such as the five-star Lotus Hotel on an area of 80,000sq.m near the National Conventional Centre and the Kinh Bac Financial Tower at 1A Lang Ha Street in Ha Noi.
Last year the company issued corporate bonds worth a total of VND2 trillion ($106.4 million). Along with the additional $200 million worth of convertible bonds, KBC should have sufficient financial resources for carrying out its planned property development projects in this year, Tam said.
The company earned a net profit of VND614.3 billion ($32.7 million) last year, nearly double the target set for the year. It was expected to pay a 30-per-cent dividend in shares to existing shareholders early this year and planned to pay another 30 per cent at year-end.
KBC shares closed yesterday’s trading at VND58,000 ($3.10) per share. The company expects share value to rebound to about VND70,000 ($3.70) once the VN-Index returns to a level of around 550 points.