KSE's bondholders to get early redemption

S$76.125m needed to satisfy 70% of old convertible bonds.

According to OCBC Investment Research, as of 6 Mar 2013, bondholders of KSE’s earlier issue of convertible bonds (due 2015, but early redemption Mar 2013) have tendered notices for an early redemption. 70% of the S$107m in principal amount of the convertible bonds are being redeemed, hence KSE will have to prepare S$76.125m in funds. 

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This will be satisfied by: 1) S$40.9m from the rights issue, 2) S$30m from the issue of new convertible bonds and 3) S$5.2m from internal resources. OCBC and TAEL One currently hold S$28.5m and S$33.5m in principal amount of the convertible bonds due 2015, respectively.  

Early redemption issue resolved; overhang over. We are encouraged to see that the group has resolved the early redemption issue of its old convertible bonds, and believe that an earlier overhang on its stock should be cleared with these developments.

Wed is last day of rights trading. KS Energy (KSE) recently announced that it will undertake a renounceable underwritten rights issue1to raise gross proceeds of about S$42.1m – the company is offering up to 111.65m new ordinary shares at an issue price of S$0.41 for each rights share, on the basis of one rights share for every four existing shares. The last day for the trading of “nil-paid” rights is this Wed (20 Mar 2013). 

S$45m new convertible bonds issue. KSE also earlier announced that it has entered into a purchase agreement with Oversea-Chinese Banking Corporation Ltd (OCBC) and TAEL One Partners Ltd (TAEL One) for the proposed issue of new convertible bonds.

KSE will issue S$45m in principal amount of new convertible bonds, of which OCBC will subscribe for S$30m and TAEL One the remaining S$15m. The initial conversion price is S$0.83/share, and the maturity date is three years later, on or about 21 Mar 2016.