BANK South Pacific (BSP) has launched an issue of mandatory convertible notes to sophisticated investors in Fiji.
The notes have a three-year term, a coupon of 7% and are mandatory convertible to Fiji class shares upon maturity on 2013 and in certain circumstances at earlier dates.
In a statement to the Port Moresby Stock Exchange (POMSoX), BSP said the issue was for a minimum subscription of F$5 million (K7.16 million) but BSP may accept oversubscriptions depending on demand level.
The notes will be issued on the basis of 10 shares for one note and priced at F$5.25 per share. This equates to K7.56 per note at F$ selling rate of 1.44.
In the five trading days to last Thursday, the volume weighted average price of BSP shares on POMSoX) was K0.74.
The notes will be issued by BSP Convertible Notes Ltd, a Fiji-registered special-purpose company and a wholly-owned subsidiary of BSP, established to act as issuer of the notes and subsequent Fiji class shares.
The class shares are a special class of shares that are denominated in Fiji dollar but give a holder certain economic rights based on the ordinary shares of BSP.
They will receive an equivalent dividend in Fiji currency, have equivalent rights with BSP shareholders in winding up and will have their rights adjusted to reflect capital construction events that might apply to BSP in the future.
BSP chief executive Ian Clyne said this type of issue had been common in other parts of the developed world, more so in Australia and New Zealand.
But he said this was the first of issue of this type and structure to be launched in the Pacific.
“It is an important development in capital market activity in the region.
“The issue has required close consultation by BSP with Bank of PNG and the Reserve Bank of Fiji where BSP has fully complied with all conditions for approval,” he said.