Chaoda bond to raise US$200m

PUBLISHED : Thursday, 20 January, 2005, 12:00am
UPDATED : Thursday, 20 January, 2005, 12:00am

Chaoda Modern Agriculture (Holdings), which shelved its maiden bond issue last year, is once again looking to the bond market for funds.

The vegetable producer had planned to issue a US$150 million five-year, fixed-rate bond in July last year to fund expansion.

However, the issue was cancelled due to poor market conditions, according to a company statement, although there were concerns about corporate governance issues at the company.

Chairman Kwok Ho said a few months after pulling the bond issue that prospective lenders had been asking for a high, 8 per cent annual interest rate.

'The market still remembered PricewaterhouseCoopers' resignation as an auditor of the company in 2003 and therefore there were demands for a higher interest rate,' one source said, adding that the auditor's resignation cast doubts over the reliability of Chaoda's financial reporting.

'But with the market now hungry for high-yield issues from second-tier names, Chaoda might be able to relaunch the bond.'

The US$450 million issue from Asia Aluminum Holdings a month ago attracted demand of more than US$2 billion.

Encouraged by that response, Chaoda has increased the size of its bond to US$200 million, said a term sheet given to fund managers.

The company has a market capitalisation of $7.26 billion, based on its closing price yesterday.

Marketing of the bond will begin on Monday in Singapore and then move to Hong Kong on Tuesday, London on Wednesday and the United States on Thursday.

Final pricing is expected in the week of January 31.

Credit Suisse First Boston, Deutsche Bank and Merrill Lynch are managing the issue.