ABN AMRO released guidance on the B2/B+ rated deal at 10.25% to 10.5%. When the deal finally closed it priced at 99.041, paying a semi-annual coupon of 10%, to yield 10.25%, on a spread basis that equates to 568bp over comparable US Treasuries. Xinhua has the option to call the bonds after three years at 105% and at 102.5% in year four.
The lead closed the order book at almost three times oversubscribed, with participation from 60 investors. Geographically, 39% of the bonds were sold to Asian accounts, 35% to UK accounts, 32% to Europe accounts and 4% to offshore US investors. By investor type, 37% of the paper was placed with retail investors, 32% with banks, 22% with fund managers and 9% with hedge funds.
Comparables are difficult given the wide breadth of trading on deals within XinhuaÆs rating range. PakistanÆs Mobilink is trading slightly tighter than its 8.625% initial pricing range; Malaysian holding company, RanhillÆs 2011 B-/B- rated deal, which priced last month, is trading at 12.50%; property developer Greentown has a Ba2 rated 2013 trading at around 9%; property company Lippo Karawaci has a B1 rated 2011 trading at 9.30%; tyre manufacturer Gajah TunggalÆs deal, a $325 million five-year B2/B deal, is trading at 11%; while ThailandÆs G-SteelÆs B1 rated 2010 deal is trading at 12.78%.
On Tuesday Xinhua reported that for the first nine months of 2006, it made a profit of $15.8 million, up more than three times over the same period last year, while revenue was up 64% from $76.5 million in 2005 to $125.1 million. Ebitda rose similarly, up 68% from 4.8% last year to 15.8% as at October 31.
In its presale report, S&P noted: ôIn 2005, XFL reported total revenue of $110 million and net profit of $10.3 million under International Financial Reporting Standards. This was the first time the company had reported positive net earnings. Total revenue was $75 million and net profit $4.9 million in the first six months of 2006. The company is on track to achieve its 2006 full-year revenue target of $166 million. Carve-outs of certain business units from the high yield bond, particularly its distribution & media operation, will dilute creditors' access to their cash flows.ö
Xinhua, which listed on the Mother Board of the Tokyo Stock Exchange in
October 2004, is an integrated provider of indices, ratings, financial
news and investor relations, especially in regard to China. It has 19
offices and 20 news bureaus across Asia, Australia, North America and
Europe. It covers key Chinese and international markets.
The company has rapidly grown over the past few years, using acquisitions to supplement organic growth. Overseas subsidiaries are more established than Xinhua and currently contribute the majority of the group's overall revenue and Ebitda. The ratings business accounts for the largest portion of Ebidta, and, combined with indices and distribution & media, account for the majority of cash flow.
Xinhua will use the proceeds from the sale of the notes to refinance an outstanding loan and to fund further strategic acquisitions.
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