Industrial Holding Bulgaria successfully issued bonds (15.04.2015)
The company has successfully raised almost BGN 50m from the public offering.
Nearly all of the issued bonds of Industrial Holding Bulgaria were subscribed during the initial public offering (IPO), company officials said. From the offered 500,000 bonds, 499,996 were subscribed and paid. This way, the holding received almost BGN 50m. The bonds are convertible, which means that at maturity date the holders are able to convert them into shares and therefore the creditors can become shareholders of the company. The total expenses for the preparation of the offering amounted to BGN 52,100. Company officials said that they did not have any complications or arguments during the trade or subscription. Manager of the bond issue was the Bulgarian investment bank MANE Capital and financial intermediary was Allianz bank.
Next bond issue
The bonds have a 3-year term and an annual interest rate of 5%. Payments are made semi-annually. So far, the holding said that the money would be used to refinance old debt and for new acquisitions.
Recently, IH Bulgaria finished the conversion of its previous bond issue. A total of 9 creditors requested to convert their bonds into shares and thus the holding’s capital was increased by BGN 9.4m totaling BGN 77.4m. The bonds issue had a total market value of BGN 30m but as a result of the conversion the holding saved BGN 9.4m from the principal amount and paid only BGN 20.6m. The interest on the previous bond issue was 6.5% paid semi-annually. The decrease in the interest rate is in line with the overall decline in European interest rates.
“Industrial Holding Bulgaria” is one of the largest former privatization funds. Part of its portfolio is the Varna Shipyard “Bulyard”, investments in companies related to marine transportation, as well as in mechanical engineering. A common practice in recent years has been the capital increase through bonds issues, which is then used for investments in subsidiaries.
After publicly announcing the successful placement of the bonds issue, the shares of IH Bulgaria, traded on the Bulgarian Stock Exchange, fell by 0.09% to BGN 1.07. Investors exchanged only 240 shares for the day. The conversion of the bonds into shares dilutes the capital and it is possible this is the main reason for the negative behavior of investors.
Total revenues fell from BGN 131m in 2013 to BGN 104.3m in 2014. Net profits fell from BGN 9m to BGN 7.9m respectively. The main cause of the decline in profits is the reduction in sales. Financial profits almost kept their level.
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