Razon-led International Container Terminal Services Inc. (ICTSI) has offered to buy back up to $775 million worth of offshore perpetual bonds and replace them with new securities, taking advantage of lower interest rates to reduce its debt servicing cost.
In a disclosure to the Philippine Stock Exchange on Monday, ICTSI said its board had approved a tender offer by its subsidiary, Royal Capital BV, for the holders of its $400-million outstanding perpetual securities carrying an interest rate of 5.8875 percent per annum.
The same offer will be issued to holders of Royal Capital’s $375-million, 4.875-percent perpetual notes.
At the same time, the board approved the issuance by another subsidiary, ICTSI Treasury BV, of new senior guaranteed notes at such amount, tranches, distribution rates and other terms and conditions.
ICTSI’s board approved the appointment of Citigroup Global Markets Ltd. and The Hongkong and Shanghai Banking Corporation Ltd. as joint lead managers for the new notes offer and as dealer managers for the tender offer.
The disclosure said Royal Capital’s acceptance of perpetual securities validly tendered would be subjected to the pricing of the new notes, without prejudice to other terms and conditions stated in the tender offer memorandum and other offer materials.
“The company is undertaking the tender offer [through Royal Capital] as part of its strategy to manage the profile of its existing financing,” ICTSI said in its disclosure.
The new notes will be made under Regulation S of the US Securities Act, which means that they may not be offered, sold or delivered within the United States.