ICTSI float targets $350M new capital

International Container Terminal Services Inc. (ICTSI) and issuer Royal Capital B.V. successfully priced a $350 million offering of senior guaranteed perpetual capital securities, guaranteed by ICTSI and structured to constitute equity under International Financial Reporting Standards (IFRS).

The perpetual securities brings additional liquidity for ICTSI and allows ICTSI to further strengthen its practice of prudent capital management to better match its long-term port concessions.

The transaction is significant given ICTSI was the first ASEAN issuer ever to have offered equity-accounted fixed-for-life senior perpetual securities in the international debt capital market.

Despite volatile rates during the days leading up to the pricing date, numerous new issuance in the debt capital market and a relatively aggressive structure, ICTSI was able to garner significant support for this transaction, highlighting the confidence that investors have in ICTSI.

“We are pleased with the success of the new issue of fixed-for-life senior perpetual securities. This transaction is part of our strategy of prudent and value accretive capital and risk management, while further extending the duration of our liabilities to be in line with our concessionary assets. It similarly provides additional liquidity in the context of ICTSI’s growth strategy,” ICTSI Senior Vice President and Chief Financial Officer Rafael J. Consing Jr. said.

“This is a landmark transaction as the first ASEAN issuer ever to have offered equity-accounted fixed-for-life senior perpetual securities in the international debt capital market. Standard Chartered is privileged to be among the Joint Lead Managers for the New Perpetual Securities issuance as we have been supportive with a number of issuances of ICTSI in the past,” Lynette Ortiz, ICTSI Chief Executive Officer said.

The issue represents ICTSI’s first fixed-for-life senior perpetual capital securities, following four successful senior perpetual capital securities issuances, which have step-ups, priced between 2011 and 2016.

Last January 11, ICTSI re-opened the books for an additional tap of $50 million and were priced at par to yield 5.875 percent per annum, bringing the total offering size to $400 million.

The perpetual securities confer a right to receive distributions at a rate of 5.875 percent per annum (in arrears on 5 May and 5 November of each year) and were priced at par to yield 5.875 percent per annum.

The issue shall rank pari passu with all other outstanding unsecured and unsubordinated obligations of theIssuer, who will have the right to redeem the Perpetual Securities on May 5, 2022 and any distribution payment date after the May 5, 2022.

Consistent with the requirements for equity under IFRS, Royal Capital may resolve, at its sole discretion, to defer payment of distribution otherwise payable on a distribution payment date. It intends to use proceeds from the offer of perpetual Securities for financing of acquisitions and capital expenditures and for general corporate purposes.

The Perpetual Securities were also widely distributed, on a consolidated basis, with fund managers accounting for 53 percent, banks for 13 percent, insurance or pension funds for seven percent, and private banks for 27 percent. By geography, Asia took up 75 percent with Europe at 13 percent and offshore U.S. at 12 percent.