Duc Giang-Lao Cai Chemicals JSC plans to issue convertible bonds and shares worth VND833.8 billion (US$37 million) in 2017 to merge with Lao Cai Chemical Fertilisers JSC and Bao Thang Chemicals.— Photo cafef.vn
Duc Giang-Lao Cai Chemicals JSC plans to issue convertible bonds and shares worth VND833.8 billion (US$37 million) in 2017 to merge with Lao Cai Chemical Fertilisers JSC and Bao Thang Chemicals.
The deal is expected to help Duc Giang Chemicals and Detergent Powder JSC, the parent company of the three chemical firms, move closer to the acquisition of the three firms.
This year, Duc Giang-Lao Cai Chemicals will offer three million convertible bonds to current shareholders of the three companies. The bonds have a par value of VND100,000, an annual yield rate of 2 per cent and a maturity rate of two years.
Shareholders will be able to convert those bonds into shares of Duc Giang-Lao Cai Chemicals at a ratio of 1:10 (each bond is equal to 10 shares) when the bonds come to maturity.
On the maturity date, bond interest will be paid in cash and the deposit will be transformed into shares for shareholders.
If the conversion takes place after Duc Giang-Lao Cai is merged with Duc Giang Chemicals and Detergent Powder, the original bonds will be transformed into shares of the later firm at the converting rate between the two companies.
Total money raised from bond issuance will be used as a part of investment in a VND2 trillion, 100Mw thermal power plant project.
In addition, Duc Giang-Lao Cai Chemicals will offer 53.3 million shares, worth VND533.8 billion, to convert shares of Lao Cai Chemical Fertilisers and Bao Thang Chemicals into its shares.
68.3 per cent of the shares will be issued for shareholders of Lao Cai Chemical Fertilisers to convert their shares into Duc Giang-Lao Cai Chemicals at a rate of 1:1, and the rest will be issued for shareholders to Bao Thang Chemicals at a conversion rate of 1:0.8.
After the bond and share issuance, new Duc Giang-Lao Cai Chemicals will be merged with Duc Giang Chemicals and Detergent Powder in the form of share conversion.
The M&A deal was approved by shareholders of Duc Giang Chemicals and Detergent Powder JSC at its annual shareholder meeting in April. The deal is expected to double the company’s chartered capital to VND1 trillion. — VNS