F&N wraps up bond courtship with 4 ayes, 2 nays

Singapore

HOLDERS of Fraser and Neave's (F&N) 3.15 per cent notes due 2018 agreed yesterday to amend the terms of their bonds, leaving just two unpersuaded debt series to deal with ahead of a planned split of the property and beverage company.

F&N also agreed to pay an early-acceptance fee to all bondholders who accepted its offers at similar meetings two weeks ago, even if they did not meet the early-bird deadline, "as a gesture of goodwill".

At a bondholders' meeting yesterday, investors of the 2018 notes agreed to allow F&N to split off and list its property business, Frasers Centrepoint Ltd (FCL), without triggering a technical default.

They also agreed to give F&N a call option to buy back the bonds at par plus half the coupon and accreted interest.

That meeting wrapped up F&N's initial round of courting its bondholders, which the company had to do in order to avoid a technical default if FCL is split off. Only the owners of F&N's $108.25 million of 5.5 per cent notes due 2016 and $200 million of 6 per cent notes due 2019 had rejected the deal two weeks ago; holders of the $150 million of 3.62 per cent notes due 2015, $50 million of 2.54 per cent notes due 2015 and $220 million of 2.48 per cent notes due 2016 approved it.

F&N will now have to decide how to deal with the bondholders who, by rejecting the deal, appeared to be calling F&N's bluff of a possible strategic default. If it chose to default, F&N could suffer consequences elsewhere, but would not have to pay bondholders as much.

"Now that the approval of this series of bondholders has been obtained, the F&N board should try its level best to work out an amicable solution as soon as possible to resolve the deadlock involving the two other series of bondholders who had earlier rejected the offer," corporate lawyer Robson Lee said. "Certainty on the proposed divestment of F&N's property business is important for investors who intend to trade on F&N's shares."

F&N shares closed unchanged at $5.72 yesterday.