HENDERSON Land Development is planning to raise US$400 million (about HK$3.12 billion) in a convertible guaranteed bond issue arranged by Morgan Stanley. The three-year bonds must be converted into shares of wholly owned Henderson China Holdings, or redeemed. They will have a coupon starting at four per cent, increasing to five per cent. Henderson Land's management will take the issue on a roadshow next week to North America and Europe. Also behind the issue are Wardley, Credit Suisse and First Boston. The decision to issue bonds follows the company's investigation of listing separately its mainland property development and investment arm. Henderson Land joins several Hong Kong firms that have issued convertible bonds recently. The bonds will be convertible into shares of Henderson China within three years of their issue, upon a public offering. If there is no initial public offering, the bonds will be redeemed three years from issue. Henderson Land said it would make a further announcement when the exact terms and structure of the bond issue were finalised. The bonds are expected to carry interest at step-up rates starting at four per cent a year and increasing to five per cent. Henderson Land shares now have an historic yield of 4.55 per cent on a total dividend basis, or 8.68 per cent including the $1 cash bonus announced last month, or 7.7 per cent considering the final 87 cent dividend and the cash bonus. Henderson Land chairman Lee Shau-kee said: ''The Henderson board decided that it would be in the interests of Henderson Land and Henderson China to define more clearly the business activities of the two companies, so that each company can concentrate itsfinancial and management resources on developing its independent activities.'' Mr Lee said that, after considering various alternatives, the board had decided that a bond convertible into Henderson China shares would enable it to achieve several objectives. ''It introduces Henderson China to the investment community and highlights our position in the China property market. ''It provides funds for our China property business and creates an investment opportunity for investors specifically interested in China. ''At the same time, it allows Henderson China to mature prior to listing.'' Henderson China managing director Peter Lee said the company had been pursuing property opportunities in China for years and had established a large land bank, mainly in central locations in major Chinese cities. ''The bond issue will help us continue our expansion in China,'' he said. Henderson Land owns stakes in 20 properties in Beijing, Guangzhou, Xuhui, Zhabei, Fujian, Panyu and Jingan. The largest projects are a two-phase commercial and residential development in Panyu, in which it holds a 25 per cent interest, and the Beijing railway station project. Following an audit by valuation firm C.Y. Leung & Co of its interests in Hong Kong and China Gas and Hong Kong Ferry (Holdings), 72 per cent owned Henderson Investment's adjusted net tangible assets were $16.4 billion or $7.22 a share. Henderson Land's adjusted net tangible assets are $68.1 billion or $42.69 a share. Henderson Land's share price closed on Friday at $24.20. It has jumped 18 per cent or $3.70 in the past three weeks. Last month, the company announced that net profits had jumped 64 per cent to $4 billion for the year ended June 30. Sales rose 46.9 per cent to $6.11 billion. Monitor, Page 16