Citi, HSBC lead in landmark perpetual securities issue

MANILA, Philippines - Citigroup and the Hongkong and Shanghai Banking Corp. (HSBC) are joint lead managers for the landmark perpetual securities issuance while Deutsche Bank acted as co-manager. Citigroup and HSBC also acted as dealer managers for the tender offer.

HSBC Philippines president and chief executive officer Wick Veloso said in a statement that the International Container Terminal Services Inc. (ICTSI) and Royal Capital B.V. has set a benchmark in raising financing.

“ICTSI has once again set the benchmark for innovative solutions in raising financing that is more appropriate for its line of business, while undertaking a liability management exercise that would reduce any near term re-financing risk and further enhance ICTSI’s credit profile. The strong reception from both existing and new investors across multiple geographies is a reflection of positive sentiments toward ICTSI by the investor community,” Veloso added.

Last Jan. 22, ICTSI and Royal Capital issued an 8.375 percent, subordinated perpetual capital securities. It was priced a $300-million offer guaranteed by ICTSI and structured to constitute equity under International Financial Reporting Standards or IFRS.

The New Perpetual Securities confer a right to receive distributions at a rate of 6.250-percent per annum and were priced at 99.551 percent to yield 6.375-percent per annum. It was ranked pari passu with all other outstanding unsubordinated obligations of the issuer or ICTSI, who will have the right to redeem the New Perpetual Securities on May 5, 2019, May 5, 2024, and any semi-annual distribution payment date thereafter.

Citi said that the rate of distribution for the New Perpetual Securities will be reset every five years from May 5, 2019 and will increase by 2.5 percent on May 5, 2024, in each case if the securities are not redeemed.

ICTSI intends to use proceeds from the offer of New Perpetual Securities for refinancing and general working capital purposes, including funding the tender offer.

The New Perpetual Securities were distributed with fund managers accounting for 69 percent, banks for seven percent, insurance for one percent, and private banks for 23 percent.

By geography, Asia took up 86 percent with Europe at 14 percent.

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 2.5 million twenty-foot equivalent units (TEUs).