JD Group has launched an inaugural offering of convertible bonds due June 2017 in a nominal amount of up to R1.0 billion, with an option to increase the issue size.<\/p>\n
The Bonds will be issued by JD Group, under its existing general authority, approved by JD Group shareholders in February.<\/p>\n
JD Group has Incredible Connection, along with Hi-Fi Corporation in its stable.<\/p>\n
The offering will enable JD Group to optimise its capital structure and cost of capital; extend its debt maturity profile by raising five-year bullet funding; achieve better matching of its assets and liabilities by the funding of long-term assets with long-term debt; access capital markets to diversify its sources of funding and reduce its reliance on traditional bank funding sources.<\/p>\n
The group would also be able to provide flexibility in the capital and funding structure by issuing an instrument that can be converted into equity over the life of the instrument; and enhance the financial flexibility of the business in an environment where availability of longer-term bank funding may become constrained or less attractively priced.<\/p>\n
The bonds are expected to carry a semi-annual coupon of between 7.0-7.5% per annum and will be convertible into ordinary shares in JD Group.<\/p>\n
The initial conversion price in respect of the Bonds is expected to be set at a premium of 30-35% above the reference price of R43.62, being the 5-day volume-weighted average price of JD Group Shares up to Monday, 11 June 2012.<\/p>\n
The Bonds will be issued at 100% of their nominal amount and, unless converted, repurchased or redeemed before June 2017, will be redeemed at par in June 2017. JD Group will have the option to call the Bonds after four years, if the price of JD Group Shares exceeds 130% of the then prevailing conversion price over a specified period.<\/p>\n
The Offering will be made by way of an accelerated bookbuild offering to local and international qualifying institutional investors only.<\/p>\n
The Offering is open with immediate effect.<\/p>\n
It is expected that settlement of the bonds will take place on about June 20.<\/p>\n
Rand Merchant Bank, a division of FirstRand Bank and Standard Bank of South Africa, are acting as joint bookrunners.<\/p>\n