SGD New Issue : MICLYN EXPRESS 3Y >8%
Nov. 28 (Bloomberg) — Person familiar with the matter says.
• Issuer: Manta 2 Holdings Limited to be amalgamated with Miclyn Express Offshore (MEO)
• Guarantors: Unconditional and irrevocable guarantee from each material subsidiary of MEO
• Tenor: 3-yr
• Initial Price Guidance: Mid to high 8%s
• Ranking: Senior secured guaranteed
• Format: Reg S
• PB selling concession: XXX cents
• Timing: Expected this week’s business, as early as today
MEO is 75.2%-owned by CHAMP and Headland Private Equity. CHAMP is Australia’s pioneering private equity firm, having invested in over 80 companies over the past 30 years. Headland Private Equity, formerly HSBC Private Equity (Asia) Limited, began advising Asian private equity funds in 1989, and has invested in more than 150 companies to-date. CHAMP and Headland Private Equity (the “Sponsors”) announced their intention on 6 Sept 2013 to acquire all of MEO’s outstanding shares to take the company private. The acquisition will be made via an amalgamation under Bermuda Law and upon the consummation of the amalgamation, the Sponsors and management will own 100% of MEO.
It is a sure sell but hold till maturity bond. I will not expect to see secondary prices for it frequently.
Private companies have bigger risks and that is the reason for the high coupon and the high commissions to sell.
There are no covenants to prevent further borrowing and leverage.
Accounts will not be made public so there will be information blackout on that front especially when it is governed under Bermudan law.
Now… these are selling points put out by the bank.
Comparable bonds:
Ezra 4.875% 2018- 5.33%
Ezion 4.6 2018 – 4.45%
Swiber 7.125 2017 – 6.39%
– Leverage and cashflow ratios of MEO are at the better end of its peer group: MEO’s Net Debt/EBITDA of 3.8x is more prudent than Swiber (4.8x), Ezra (15.2x) and Ezion (6.1x).
– MEO’s Return on Assets (10.1%), is the highest among its peers – Swiber (5.7%), Ezra (0.6%), Ezion (6.7%)
My observations :
1. There are not covenants to prevent MEO from increasing leverage
2. All too easy to slam the bonds you brought out a few months ago which are as illiquid as anything
AND GUESS WHAT ???
THEY PROBABLY WILL NOT DARE TO COMPARE IT TO OXLEY ! or …. lawsuits will fly.
To be circumspect, 8-9% for 3 years is generous and will make Oxley 3Y buyers feel sheepish. I am hearing that there is a possibility that this new bond will be awarded leverage too which is a good thing because more people are switching out of property speculation into bond carry trades.
And the commission is too good to deter any private banker from not pushing this deal.