China Essence’s Refinancing Plan Stalls
China Essence Group’s (CEG) plans to refinance its US$50m loan with DBS Bank have been delayed due to ‘ongoing unfavourable macroeconomic conditions and tightened bank internal controls’. CEG has approached HSBC Bank to put together an international syndication of lenders to finance the loan on June 30. The syndication was now expected to be completed by the end of next month. According to the firm, should the syndicated loan not take place, a proposal would be made for a partial repayment of the loan to DBS at the end of 2010 and the rest roll over for a period of 1-3 years. CEG expects to have adequate working capital for its current harvest season with the roll-over of its $39.7m loan from Agricultural Bank of China and Bank of Communications in July.
Significance: Given its strong 1Q11 result and healthy operating cash flow, CEG should be able to service its debt obligations with the help from the banks.
DBS To Issue 5-Year US Dollar Bonds
DBS Bank has launched a US$1b international offering of notes due 2015. The debt sales is part of DBS’ US$10b debt progranmme which was established in June. According to DBS, the notes have been priced at 99.691 and will bear a semi-annual fixed coupon of 2.375% and a yield to maturity of 2.441%. All proceeds would be utilised for the “general business purposes” of the bank and its subsidiaries. The notes are expected to be rated Aa1 by Moody’s Investors Service, AA- by Standard & Poor’s Ratings Group and AA- by Fitch Ratings.
Significance: With uncertainties still lingering and the highly volatile stock market, DBS’ notes offering should generally be well-received amongst investors who would prefer a more stable return.
Bid For C&W Unlikely: SingTel
SingTel said it was unlikely to bid for FTSE 100-listed group Cable & Wireless Worldwide (C&W) because it wants to focus on the Asia-Pacific region. This is according to a research note from Citigroup analysts after a meeting with the firm. The note said that SingTel has clarified its preference to focus on acquisitions in the Asia Pacific region where it can build scale and drive revenue growth via penetration. The company refuted British media reports that it had contacted bankers in Asia and Europe to discuss the idea of a takeover of C&W.
Significance: Given C&W’s attractive growth and valuations, and potential synergies, SingTel may revisit this option to provide the firm a global platform, should SingTel change its focus or run out of emerging-market options.
This content is contributed by Shares Investment. Shares Investment is an investment information provider since 1995, covering Singapore, Malaysia and China markets in print and digital media, seminars and data syndication | www.sharesinv.com.
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