International Container Terminal Services, Inc. (“ICTSI”) and Royal Capital B.V. (the “Issuer”) successfully priced a US$300,000,000 offering of senior perpetual capital securities, guaranteed by ICTSI (“New Perpetual Securities”). The New Perpetual Securities were structured to constitute equity under International Financial Reporting Standards and represent ICTSI’s fifth successful perpetual securities issuance.
The New Perpetual Securities confer a right to receive distributions at an initial rate of 5.00% per annum and were priced at 98.979% with a reoffer yield of 5.20% per annum. The New Perpetual Securities shall rank pari passu with all other outstanding unsubordinated obligations of the Issuer, who will have the right to redeem the New Perpetual Securities on any day from (and including) February 5, 2026 (the “First Call Date”) to (and including) May 5, 2026 (the “Step Up Date”), or on any semi-annual distribution payment date thereafter. The rate of distribution for the New Perpetual Securities will be reset on the Step Up Date and every five years thereafter.
The New Perpetual Securities were widely distributed with fund managers/asset managers, private banks, insurance companies and banks/pension funds accounting for 64%, 18%, 12% and 6% respectively. By geography, Asia accounted for 91% while Europe were allocated the remaining 9%.
In addition, an aggregate nominal principal amount of US$65,483,000 in the Issuer’s 5.50% senior perpetual capital securities callable in May 2021 (the “Existing Perpetual Securities”) was submitted by Securityholders in the Tender Offer (the “Tender Instructions”). ICTSI offered Securityholders a price of US$1,007.50 per US$1,000 in principal amount of Existing Perpetual Securities. The Issuer accepted all valid Tender Instructions submitted and has decided to further extend the offer period to July 29, 2020.
The transaction is significant in several aspects. The New Perpetual Securities benefitted from robust investor demand, allowing ICTSI to implement its largest-ever senior perpetual capital securities tightening of 42.5 bps from initial price guidance of 5.625% area. This transaction also marks ICTSI’s first perpetual securities issuance since January 2018. The concurrent Tender Offer was an investor friendly offering that facilitated investors who wished to roll over to the New Perpetual Securities whilst improving carry efficiency for ICTSI.
ICTSI Senior Vice President and Chief Financial Officer Rafael J. Consing remarked, “ICTSI’s overall financing and liability management exercise is one of three levers that we focused on in response to the ongoing global pandemic, the other two being the tactical delay in capital expenditures and sustainable cost reduction. This exercise achieved our objectives of reducing capital cost, eliminating call redemption risk in 2021, and further enhancing the strength of ICTSI’s balance sheet.”
Citigroup Global Markets Limited, The Hongkong and Shanghai Banking Corporation Limited and Standard Chartered Bank acted as Joint Lead Managers and Joint Bookrunners for the New Perpetual Securities issuance and as Joint Dealer Managers for the Tender Offer.
