Shoprite bonds trading on Monday

Shoprite bonds trading on Monday

FMCG SUPPLIER NEWS

Business Day - May 28th 2012, 08:27

Today is the first day of trade for Shoprite’s convertible registered bonds on the JSE after the group received approval on Friday. 

SA’s biggest supermarket chain announced a concurrent share and bond offering in March aimed at raising funds to expand its operations, a move analysts say will help it take on Walmart.

It issued 27,1-million new shares, or about 5% of total shares in issue, at a price of R127,50 for proceeds of close to R3,5bn.

Its bond and share offering raised about R8bn, which CEO Whitey Basson said would strengthen its balance sheet by converting existing short-term funding to longer-term loans.

Shoprite placed R4,5bn fixed-rate senior unsecured guaranteed convertible registered bonds due in 2017 in March, and on May 9 placed R200m debt instruments.

The debt instruments would be traded in nominals of R10000 on the JSE’s equity trading platform, the company said.

The bonds, which may be converted into Shoprite shares during the life of the bond, will carry semiannual interest of 6,5% and will be redeemable at par in 2017, unless converted into shares at the election of the bond holder.

The initial conversion price in respect of the bonds will be set at a premium of 32,5%-37,5% above the placing price of its equities.

The bonds will be issued at 100% of their nominal amount and, unless previously converted, repurchased or redeemed, will be redeemed at par in 2017.

Shoprite will have the option to call the bonds after the first three years if the price of the shares exceeds the prevailing conversion price over a specified period.