Bloomberg News

Global Bio-chem Gets Bondholder Nod for First Dim Sum Buyback

November 30, 2012

Global Bio-chem Technology Group Co. (809) will buy back 92 percent of its so-called Dim Sum bonds after noteholders agreed to the market’s first tender offer.

The company, which makes corn-based biochemical products in China, offered to repurchase its 7 percent notes due May 2014 at face value after breaching one of the debt’s terms, according to a Hong Kong stock exchange statement dated Nov. 8. Global Bio- chem will buy back 414.6 million yuan ($66.6 million) of debt, according to an announcement posted on the Singapore stock exchange’s website today.

Companies are adding more protection to their bonds to attract investors as waning yuan appreciation expectations weigh on sales, according to Fitch Ratings. Sixty percent of non- financial corporate securities in HSBC Holding Plc’s Offshore Renminbi Bond Index as of December 2011 were sold without leverage limits, according to marketing materials.

“Hopefully with more positive cases, people will come to think that this market operates just like how other markets are operating,” said Samson Lee, head of debt capital markets at BOC International, a unit of Bank of China Ltd, yesterday. “There’s nothing different about investing in Chinese paper.”

The bonds were quoted at 85.5 percent of face value before the buyback was announced and 100 percent as of 4:18 p.m. in Hong Kong yesterday, HSBC prices on Bloomberg show.

Global Bio-chem was unable to comply with one of its financial covenants after reporting a net loss for the first six months of the year, the company said in its interim report.

To contact the reporter on this story: Rachel Evans in Hong Kong at revans43@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net


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