Taiwan-based Asia Cement last night returned to the market to raise US$172.5m from a convertible bond that was upsized by 38% from the original base deal and priced close to best terms for the issuer. This was Asia Cement’s second equity-linked deal this year following a US$375m exchangeable bond into textile manufacturer Far Eastern New Century in January.
Both bonds were filed with the Taiwan regulators in December last year, but the company chose to sell the exchangeable first to take advantage of strong demand for soft commodities early this year. Since then, there has been a significant rally in Chinese cement stocks and Asia Cement, which has 80% of its production capacity in China, has risen by about 33% since late February. It closed at a three-year high of NT$40.45 on Wednesday, making this a good time for the company to issue shares at a future price — even if a 2.2% drop in the Dow Jones index in the US the night before put a dampener on Asian trading yesterday.
The deal worked, sources said, partly because it was quite small and partly because the issuer wasn’t overly aggressive with regard to the terms — although after pushing the yield and the conversion price close to the tight end, the valuation was definitely not cheap.