ICTSI unit raises $300M from perpetual bond issue

A UNIT of port operator International Container Terminal Services Inc. (ICTSI) has raised $300 million from the issuance of senior perpetual capital bonds, a hybrid equity instrument, according to a stock exchange filing on Friday.
The complex transaction, through ICTSI subsidiary Royal Capital B.V. and mainly offered to investors in Asia, was aimed at managing ICTSI’s liabilities.
Specifically, it would extend the call option on ICTSI’s perpetual bonds while allowing the company to tap further savings on its obligations, ICTSI vice president and treasurer Rafael Consing Jr. said in an interview Friday.
The new offer was priced at a yield of 6.375 percent on Thursday night, ICTSI said. It was linked to a recently concluded tender offer for $350 million subordinated guaranteed perpetual bonds, sold from 2011 to 2012, that paid 8.375 percent.
That resulting deal under the new offer provides savings of about 2 percent for ICTSI, Consing said. The money raised will be used for “refinancing and general working capital purposes” including paying for the tender offer, which drew the participation of holders of almost $230 million.
“We are pleased with the result of the tender offer for the subordinated perpetual bonds and the success of the new issue of senior perpetual bonds. This transaction will result in substantial cost savings and will optimize our capital structure within the context of ICTSI’s growth strategy,” Consing said in a separate statement.
Citigroup and HSBC acted as joint lead managers for the new perpetual securities issuance while Deutsche Bank acted as co-manager. Citigroup and HSBC also acted as dealer managers for the tender offer.
ICTSI, whose port operations extend from the Philippines to various emerging markets around the world, described the transaction as a landmark deal.
The tender offer is the first such transaction targeting repurchase of US dollar perpetual securities in Asia while the new perpetual securities represent the first offering of US dollar senior perpetual securities by a Philippine issuer.
“This is also the first Asian corporate liability management exercise and the first senior corporate hybrid capital trade globally in 2015,” ICTSI said.
ICTSI owns or operates a total of 29 common user container terminals located in 21 countries, with a focus on facilities having total annual throughputs ranging from 50,000 to 2,500,000 twenty-foot equivalent units.