SGD New Issue Review : Ezion 7+% Perpetual

NEW ISSUE: EZION HOLDINGS LIMITED SGD SUBORDINATED PERP-NC-4Y

Issuer: Ezion Holdings Limited
Issue:  SGD Subordinated Perpetual Securities
Ratings: Unrated
Format:  Registered form, Regulation S only and S274/275 of                              SFA, issuance off S$1.5 billion Multicurrency Debt Issuance Programme
Issue Size:   TBD
Initial Price Guidance:    Low 7%
Tenor: Perpetual NC4
Settlement Date:   [●] 2014
Ranking:   Subordinated; Senior only to Issuer’s ordinary shares
Call Option:    [●] 2018 & at every distribution date thereafter at                            par; Redemption may be in whole or in part (on a pro-rata basis)
Distribution:  Fixed. Reset in Year 4 based on prevailing SGD 4Y SOR & every 4 years thereafter
Step up:  300bps from Year 4 onwards
Distribution Payment:Act/365 days (fixed), payable semi-annually in arrear
Distribution Deferral:  At issuer’s discretion. Any deferred Distributions  are cumulative and on a compounding basis
Dividend Pusher: Yes, with 12 month look back period
Dividend Stopper: Yes
Other Redemption:  At par under taxation reasons, accounting reasons, minimal outstanding amount and tax deductibility reasons
Details: SGD250k/ S$1.5 billion Multicurrency Debt Issuance Programme/ CDP
Listing:  SGX-ST
Governing Law:  Singapore law

– New Ezion Perp NC 4 announced on the back of strong reverse interests
– IPG at low 7%
– Structure: Perp NC 4, reset every yr 4, step up 300bps in yr 4 if not called, dividend pusher, dividend stopper
– Size: TBD
– PB selling concession: 50c
– Timing: This week’s business, as early as today

Comps
EZISP4.875% 06/21: 99.58, 5.00%, sor + 366
EZISP7.8% Perp NC 2015: 102.00, 5.37%, sor + 496

Share Price

ezion share price

Market Cap : SGD 2.35 bio

Dividends : 0.06%

Yesterday Charisma Energy set up at S$ 500 mio multicurrency debt program. Ezion is a major shareholder of Charisma (41.42%). Charisma’s shares enjoyed a sudden spike earlier this month.

Today Ezion is proposing a perpetual after their 7 year bond issue earlier in May this year, paying 4.875%.

Ezion has done well this round with their 3rd quarter financials showing strong profit growth. Selling their Australian business to AusGroup last week should give them a profit for this quarter too.

And their cash position is very healthy.

The offshore rig business should be challenging going ahead but we are not seeing any profit warnings from them yet or contracts lapsing.

Looking at the 3 most frequent O&G issuers in Singapore.

ONG BOND PRICES

Note that Swiber’s perp is a senior perp too, just in case.

7% should be enticing enough to get investors in as the pricing is in line with   Barclays coco bond which is dealing at the 7% handle and Bank of China coco at 102.00 already.

I would have a really good laugh if Ezion goes on to do a share buyback after this.