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Johannesburg - Investors punished Brait [JSE:BAT] on Friday, sending the share price down more than 11% in early trade after the investment holding company announced the launch of a R7.4bn bond offer.
The proceeds of the offering of £350m (about R7.4bn) of unsubordinated, unsecured convertible bonds due in 2020 with a denomination of £100 000 each, will primarily be used to fund strategic acquisitions, Brait said in an announcement to shareholders.
By 11:50 on the JSE, the shares changed hands down 9.9% at R127.10 after declining as much as 11.29% earlier.
The company, controlled by billionaire Christo Wiese, has its primary listing on the Euro MTF market of the Luxembourg Stock Exchange and its secondary listing on the JSE.
Brait said the bonds, which are expected to mature on September 18 2020, will be issued at par and are expected to carry a coupon of between 2.25% and 2.75% per annum payable semi-annually in arrear. The bonds will, subject to certain conditions and a cash settlement option at the discretion of the company, be convertible into ordinary Brait shares.
The initial conversion price is expected to be set at a premium between 30% and 35% above the volume-weighted average price of the ordinary shares on the JSE (translated into British pounds) between launch and pricing. The conversion price will be subject to customary adjustments.
READ: Brait to sell R15.6bn Steinhoff stake
Under the terms of the bonds, the company will have among others the right to elect to settle any conversion entirely in ordinary shares, cash or a combination of the two.
The offering will be made to selected investors only in terms of the applicable private placement regimes without constituting a public offer, the company emphasised.
The company intends to apply for the bonds to be listed on the Open Market segment of the Frankfurt Stock Exchange within 30 days following the closing and settlement date.
