China Railway Rolling Stock Corporation (CRRC), the world’s largest rolling stock manufacturer, has raised $600 million via convertible bonds to fund its ongoing operations and support investments in new projects, according to a filing on the Hong Kong Stock Exchange.
The transaction marks the second H-share convertible bond sale in the course of a week following the $500 million offering by China Railway Construction Corporation (CRCC), the world’s second-largest construction and engineering company.
Maturing on 5 February 2021, the CRRC bonds are zero-coupon and do not bear any interest. The initial conversion price will be HKD9.65 (€1.14; $1.24) per share, representing a premium of 32.2 percent over the closing price of HKD7.3 per H Share as quoted on 25 January, the day it priced.
CRRC is offering the bookrunners of the bond sale additional option bonds of up to $200 million, exercisable within 30 days from the closing date.
The net proceeds from the subscription of all bonds, including the $200 million option bonds, will total about $793.6 million. It will be used to fund the production processes and day-to-day operational needs of the company, adjust its debt structure, and boost working capital and project investments.
According to press sources, the order book closed twice covered, with about 50 investors participating. JP Morgan, UBS, CICC, Bank of America Merrill Lynch, Deutsche Bank, HSBC, and CMB International were the joint bookrunners.
Listed on the Hong Kong and Shanghai Stock Exchanges, state-owned CRRC was created last April through a merger between China CSR Corp and China CNR Corp, two high-speed train construction companies, in a bid to consolidate its competitive edge in overseas railway tenders. It has a market capitalisation of HKD296 billion, as of today.
Earlier this week, CRRC also agreed to acquire a 13.9 percent stake in Singapore-based Viallianz, an offshore support vessels and integrated marine solutions provider to the oil and gas industry, for a total investment sum of $16.58 million. The company said the acquisition will help advance its plan to expand into the offshore and marine sector.