This deal is the first ever cross-border exchangeable bond issuance in Australia and the first equity-linked transaction to come out from Australia since 2013.
The bonds due 2021 are exchangeable for approximately 65 million shares in Fortescue Metals Group Ltd., an iron ore producer listed on the Australian Securities Exchange. This deal is the first ever cross-border exchangeable bond issuance in Australia and the first equity-linked transaction to come out from Australia since 2013.
The bonds, issued by a wholly-owned subsidiary of Hunan Valin incorporated in Singapore, will be listed on the Singapore Stock Exchange.
Australian top tier firm Ashurst advised on Deutsche Bank AG, Singapore Branch as the sole lead manager and bookrunner on the issuance which closed 15 November. Fellow Australian top firm Allens advised on the Australian law aspects of the transaction, including the security interest granted by the issuer over the Fortescue shares in favour of the bondholders. Meanwhile, American BigLaw Latham & Watkins represented Hunan Valin in the issuance.
Hunan Valin is one of the top 10 steel manufacturers in China by production volume and is the largest state-owned enterprise in the province of Hunan in China. It intends to use the net proceeds of issuance of the exchangeable bonds for capital and general corporate purposes.
The Ashurst team was led by partners Nigel Pridmore and Jini Lee from Ashurst Hong Kong and assisted by associates Wendi Xu, Lynn Liu and Zoe Lam. Ashurst Australia fielded two teams led by Jamie Ng (Partner) and Caroline Smart (Senior Associate) who advised the sole lead manager and bookrunner on Australian law aspects, as well as Jennifer Schlosser (Partner) and Eugene Ng (Senior Associate) who advised P.T. Limited, the Security Trustee and The Trust Company Limited, the Custodian. Ashurst LLP led by Malcolm Charles (Counsel) and Ciaran Vinaccia (Associate) advised the Security Trustee on English law aspects.
The Allens team was led by Banking & Finance Partner James Darcy, Corporate Partner Julian Donnan, and Tax Partner Martin Fry. Assistance was given by Senior Tax Counsel Thomas McAuliffe, Senior Banking & Finance Associate Katrina Huang, Senior Corporate Associate Addison Ma and Banking & Finance Lawyer Anthony Tridgell.
The Latham & Watkins team was co-led by Hong Kong partner Posit Laohaphan and Boston partner Allen Wang with Hong Kong counsel Dominik Sklenar, Hong Kong associates Zheng Wang, Raymond Cheng and Michael Yang, Singapore associate Marcus Lee and Beijing associate Susan Yang.
“We are pleased to have assisted Hunan Valin on this ground breaking deal in the Australian market,” said Allens partner Darcy.
“There have been few exchangeable deals in the Australian market recently, as opposed to convertibles, so it was a great opportunity to be involved in a deal of this complexity, combining both debt and equity skill-sets,' said Allens partner Donnan.
“We are delighted to have advised on this landmark exchangeable bond issuance. This deal demonstrates Latham’s capital markets experience, particularly in the equity-linked space, and highlights our global expertise,” said Posit Laohaphan, Global Co-chair of the Latham & Watkins Financial Institutions Industry Group.
“With over twenty years’ experience in China, our PRC capabilities and local knowledge were essential in delivering for our client,” said Latham & Watkins co-lead partner Wang.
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