Dubais port operator DP World is set to issue a $1bn senior unsecured ten-year convertible bond in an effort to diversify its funding sources and finance its expansion.
The bonds will carry an interest rate of 1.75 per cent a year, and the conversion price has been set at $27.1396. This is a 37.5 per cent premium over the share price.
US-based JP Morgan Securities is acting as global coordinator, joint bookrunner and settlement agent on the bond. US bank Citigroup, UKs HSBC and Swiss bank UBS are acting as joint bookrunners on the bond offering.
According to an official statement from DP World Group chief executive, Mohammed Sharaf, the port operator is raising the money to take advantage of the low-cost of long-term finance in the convertible market.
The bonds will also help the company access a broader range of investors.
The port operator is planning to list the bonds on the open market segment of the Frankfurt Stock Exchange.
The proceeds of the bond will also be used to fuel the port operators regionally and international growth. DP World operates Dubais major port Jebel Ali as well as many ports around the world.
Earlier in 2014, MEED reported that the company was on track with its $3.7bn capital expenditure programme covering 2012 to 2014.
In 2013, it spent $1.063bn, mainly on its new London Gateway port in the UK, Embraport in Brazil and the expansion of Terminal 2 at Jebel Ali port in Dubai, all of which opened in 2013.
It is planning to make further investments this year, increasing capacity at Jebel Ali port, where Terminal 3 is expected to be opened, bringing the ports total capacity to 19 million 20-foot equivalent units (TEU). It is also adding capacity at its Rotterdam operations in the Netherlands.