TPK raises $436 million from CB, GDR

TPK Holding has raised $200 million from the sale of a five-year zero-coupon, zero-yield convertible bond, and raised $236.2 million from a concurrent offering of global depositary receipts (GDRs).

With manufacturing facilities based in Xiamen in Fujian province, TPK focuses exclusively on making touch screens for computers and handheld devices, and is a supplier to Apple. The company was listed in Taiwan in 2010.

The GDR offering will help to raise funds for subsidiaries to expand plants and acquire machinery and equipment, the company said in a statement yesterday. It plans to use the proceeds from the CB for the procurement of raw materials overseas.

In April last year, TPK also sold $400 million worth of three-year convertible bonds to raise funds for expansion.

For the placement tranche of the concurrent deal done on Tuesday night, TPK offered 17.6 million GDRs for $13.42 (about NT$393) each, raising $236.2 million. The placement price represents a 3.9% discount over Tuesday’s closing price of NT$409.5. It was marketed in a range between $13.42 and $13.82 per GDR (about NT$393.4 to NT$405.1).

Meanwhile, the CB raised $200 million. It has a five-year maturity with an investor put option in the third year. The deal came with a fixed coupon and a fixed yield of 0%, and was marketed with a conversion premium in a range between 15% and 25% over the GDR placement price.

The deal resulted in a 15% conversion premium, and translates into an initial conversion price of NT$452.68. The initial conversion price is a 10.5% premium over Tuesday’s close. There was some sensitivity to the conversion level, which is why the company decided to price at the low end of the range, one source said.

The bonds were marketed with a credit spread of 275bp, and there was no stock borrow available. It comes with a conversion price adjustment for all cash dividends. The final terms gave a bond floor of 90.9% and an implied volatility of around 25% to 26%.

Both tranches attracted strong demand as investors look for quality names to invest in. In the GDR portion, more than 40 investors participated, and they were a mix of long-only and hedge fund investors, one source said. There were more investors from Asia, and the top 10 accounts took 67% of the book, the person noted.

In the CB portion, more than 60 investors were in the book, and they were almost equally split between outright and hedge fund investors, mostly from Asia and Europe, another source said. The CB book was multiple-times oversubscribed, the person added.

The CB portion of the deal was launched at about 3pm on Tuesday in Hong Kong and the books were closed at around 6pm. The GDR portion was launched at around the same time and closed at 8pm.

After the transaction, TPK’s stock ended yesterday’s trading down 3.8% at NT$394, remaining above the placement price. The stock has climbed 35% since the start of the year, outperforming a rise of about 8.4% on the Taiwan Stock Exchange Weighted Index during the same period. The index was down 0.8% yesterday.

J.P. Morgan and Nomura were joint global coordinators and bookrunners for the deal.