ONE of the largest hospitality, restaurant and lifestyle companies in Asia-Pacific, Minor International PCL (MINT), returned to the international bond market as it priced on June 22 a US$300 million perpetual senior capital securities as part of the company’s comprehensive capital structure plan. The Thai-based company basically adopted a similar structure it used in November 2018 when it accessed the offshore bond market for the first time, also with a guarantee from Bangkok Bank.

The Reg S non-call three-year deal was priced at a yield of 3.10%, or 70bp inside the initial price guidance of 3.80% area on the back of 11x oversubscribed orders at the peak of the book building process. The bonds were largely distributed to Asian accounts at 88%, with the remaining 12% sold to European accounts. By type of investors, fund managers and insurance companies were the biggest buyers as they accounted for 87% of the paper.

The proceeds from the securities will be used to refinance existing debts and for working capital purposes. The securities will be treated as equity on MINT’s balance sheet under the Thai Accounting Standard 32 (TAS 32). They are part of MINT’s comprehensive funding strategy announced on May 18 this year in order to strengthen its capital base and balance sheet. Amid the adverse impact on its operations from the Covid-19 pandemic, the company says it is taking a proactive approach to ensure its ability to service its obligations and to maintain its commitment to the quality of its balance sheet.

In addition to the successful issuance of perpetual securities, the funding strategy includes a rights’ offering of 10 billion baht (US$322.60 million) and three-year warrants amounting to five billion baht, which will be both issued in the third quarter of this year. MINT says the combined 25-billion-baht equivalent capital plan from the three fund raisings will provide the company with liquidity during the uncertain times of the virus outbreak, as well as enhance its balance sheet with the increased equity base.

The exercise price of the warrants will be set at a premium of no more than 10% to the market price in early third quarter of 2020. Such exercise price, MINT points out, is not indicative of future share price, but will act as a reward for the company’s existing shareholders.

HSBC acted as the sole global coordinator for the bond transaction as well as a joint bookrunner and lead manager along with ANZ, Bank of America Securities and Standard Chartered.

With such prudent capital management, MINT’s balance sheet will be strengthened as interest-bearing debt-to-equity ratio is expected to be managed down to its internal policy of 1.3x by the end of 2020. This will further help the company be well-positioned to capitalize on growth opportunities in its key markets globally in the event the Covid-19 pandemic subsides.

Furthermore, as another layer of buffer to manage its capital structure, MINT has successfully obtained approval from all of its creditors, both bondholders and bank creditors, for waiver consent on its debt covenant testing for its interest-bearing debt-to-equity ratio of not more than 1.75x for the next three quarters, throughout 2020.

Commenting on the capital raising, MINT group CFO Brian Delaney says the success of the perpetual bond offering is a testimony of market’s support of MINT and its balance sheet strengthening strategy. He adds: “We have already passed the worst point of this pandemic in April. It is time for us to march forward and upward. We are in the process of putting in place “Business Beyond Covid” plans for all three businesses to adapt and rebuild, in order to reflect the change of consumers’ behaviour. Most importantly, we maintain our commitment to stay agile in order to maximize shareholders’ return.”

In the first quarter of 2020, MINT reported a net loss of 1.774 billion baht as a result of the adverse impact of Covid-19 on its three businesses across the globe, together with an unfavourable impact from the new accounting standard, Thai Financial Reporting Standard 16 (TFRS 16), on leases.