HONG KONG, - Shanghai-listed Joincare Pharmaceutical Group Industry said it plans to issue up to 700 million yuan ($102.5 million) worth of bonds exchangeable into Livzon Pharmaceutical shares, in what would be China's first exchangeable bond.
Shareholders of Shenzhen-listed Livzon Pharmaceutical (000513.SZ), in which Joincare (600380.SS) owns a 25.33 percent stake, will have priority in subscriptions for the six-year bond, Joincare said in a statement on Monday.
Last October China's Securities Regulatory Commission issued guidelines to allow the issue of exchangeable bonds with an aim to help lockup shares float into the market in an orderly way under Beijing's state-owned share reform.
"This is the first exchangeable bond in China and I believe more will come as there are a large of number of lockup shares under the reform," one Chinese bond trader said.
Chinese stocks have rebounded strongly this year and many people would like to invest in the bond issue since it has an equity component, the trader said.
The Shanghai Composite Index .SSEC has gone up 72 percent this year after lossing 65 percent in 2008 on the back of the global financial crisis.
The bond, which is pending regulatory and shareholder approval, will be guaranteed by 40 million Livzon shares.
The initial exchange price will be at a premium to the 20-trading day average of Livzon shares before the announcement and holders will be able choose to exchange the bond into shares after two years to the end of the bond's life time, the company said.
Proceeds will be used to fund Joincare's projects and repay loans, it added. ($1=6.832 Yuan) (Reporting by Alison Leung; Editing by Jonathan Hopfner)
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