The roadshow kicked off in Singapore on November 22 and wrapped up last week following stops in London on Monday and Tuesday and the US on Thursday and Friday.
Initially, guidance was released at around 11% for the seven-year and 500bp over Libor for the FRN. However, as the deal neared pricing on Wednesday in New York, the structure was trimmed down to just the seven-year portion.
When the B2/B rated deal finally closed early Thursday morning Hong Kong time, it had been upsized to $465 million, with final pricing coming in at 98.799% on a 10.75% coupon to yield at 11.00%.
The deal has since traded up at the open and was last quoted at 99.25%
Final order books closed over the $700 million mark with more than 50 investors being involved in the transaction. By investor type, 76% of the deal went to fund managers, 11% went to insurance providers, and 6% went to banks with the remaining 7% heading to retail/other designated accounts. It should be noted, that the deal enjoyed the support of several anchor orders which accounted for roughly 65% of the total bonds.
Geographically, US accounts took up the 70% of the deal, Europe bought 11%, and Asia took the last 19%.
The deal was watched very closely by the market, and was not short of its detractors, given that its parent True Corp cancelled a $225 million Reg S/144a bond transaction at the end of last year. The leads also had the challenging prospect of selling a deal with less than enviable metrics and a debt-to-Ebidta ratio of close to 6% - high even for Asian high-yield credits.
In its presale ratings report, MoodyÆs noted that: "The (P)B2 rating reflects True Move's established network and subscriber base, and the ongoing growth evident in the Thai cellular market. The rating also takes into account close links with True Corp (Ba3/negative) - its 93.4% parent - given True Move's integral operational position within the group.
"On the other hand, such credit strengths are offset by True Move's distant third-ranking market position, the increasingly competitive nature of the cellular market and its high financial leverage, all of which may impair its ability to fully execute its business plan, as well as its exposure to potential regulatory challenges in the Thai cellular market.
The rating outlook is negative, based on concern that True Move may not be able to comply with lenders' financial covenants after March 31, 2007 - including a ratio of net debt-to-Ebidta below 4.5 times.ö
However, it would be unjust to simply highlight the challenges the credit posed.
As a key subsidiary to its parent, True Move has a strategic importance to True Corp. True Move is 93% indirectly owned by True Corp - True Move is 99.9% owned by Bangkok Inter Teletech (BITCO), which is in turn 93% held by True Corp.
As ThailandÆs only fully integrated communications provider, True Move is considered a core participant to True CorpÆs strategy, ensuring that the parent will have a very strong interest in the financial strength and performance of True Move.
Additionally, True Move has seen its cellular market share grow significantly over the previous three years. Having grown from a peripheral player in 2004 with an 8% market share to the third largest operator, after Advanced Info Services AIS) with 49% market share and Total Access Communications (TAC) with 32% market share, with 7 million subscribers and 21% market share.
Lastly, True MoveÆs network covers some 90% of the countryÆs population, which provides it with a significant competitive advantage in a country that has a relatively low level of penetration in the cellular market û about 55%.
True Move will use the proceeds from the sale of the bonds to refinance $450 million of Thai Bank debt and deal-related expenses. With the completion of sale of the bonds, True Move secured-debt-to-total-assets will decline to about 30% from 60%.
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