[Study Notes] ICBC convertible bond issuance announcement

Basic knowledge

1. Convertible Bond: A special enterprise bond that can be converted to ordinary stocks at a specific time and under certain conditions.
2. Double choice is the primary financial feature of convertible corporate bonds.
On the one hand,Investors can choose whether to convert sharesAnd bear the opportunity cost of low conversion rate;
On the other hand,Convertible bond issuer has the right to implement redemption termsTo this end, you must pay a higher interest rate than the convertible bonds without redemption terms.

Release announcement

1. Total release amount: This total release$25 billionConvertible bonds, totaling 0.25 billion sheets.

2. Release Method:
(1)Except for the controlling shareholder HuijinThe original A-share shareholders give priority to the distribution;
The number of A-shares held by the issuer registered after the stock registration day endsProportion of convertible bonds worth RMB 0.51 for distribution per share, And converted to the number of hands at 1000 yuan/hand, each hand is a purchase unit.
The issuer has a total of 14,639,357,893 A-shares except the controlling shareholder, all of which are unrestricted tradable shares. Based on the priority distribution ratio of the current issuance, the original A-share shareholders other than the controlling shareholder can subscribe to a maximum of 7,466,072 shares.
NOTE: If all non-controlling shareholders exercise the distribution right, the distribution amount is 7.466 billion, accounting for 29.86% Of the total issuance amount,17.534 billion yuan remaining.

(2) The proportion of the remaining balance (including the portion of the original A-share shareholders who give up preferential placement) on the offline issuance and online issuance of the default issuance quantity is70%: 30%

3. Each Institutional Investor involved in online/offline purchase should pay the deposit in full and in a timely manner. The deposit amount is 20% of the total purchase amount. (Organizations have 5 times of leverage)

4. Online publishing: subscriptionCodeFor "783398", each account can purchase up to 7.5 billion yuan.
Equity registration day (T-1 day): August 30, 2010
Purchase date (t): August 31, 2010

5. Basic information about convertible bonds:
(1) bond term: the term of the issuance of convertible bonds is six years from the date of issuance, that is, from January 1, August 31-20, 2010 to January 1, August 31.
(2) face-to-face interest rate: 0.5% for the first year, 0.7% for the second year, 0.9% for the third year, 1.1% for the fourth year, 1.4% for the fifth year, and 1.8% for the sixth year.
(3) debt repayment upon expiration: Within five trading days after the expiration of the convertible bonds105% (including the last interest period)Redeem all convertible bonds not convertible.
(4) Interest payment method: The issued convertible bonds adopt the annual interest payment method, and the interest settlement start date is the first day of the issuance of convertible bonds.
(5) initial conversion price:4.20 RMB/share. (Not lower than the average A-share transaction price of the company on the 20 trading days prior to the prospectus and the average A-share transaction price on the previous trading day)
(6) Conversion start and end dates:From the first trading day of six months after the issuance of convertible bonds ends to the expiration date of Convertible Bonds(That is, from January 1, March 1-20, 2011 to January 1, August 31)
(7) Credit Rating: AAA
Note: The annual return rate is 9.6% (excluding compound interest), and the annual return rate is 1.4578%.

6. determine the number of convertible shares:

When the convertible bond holder applies for conversion during the conversion period, the number of convertible bonds is calculated as: q = V/P, and an integer multiple of the same stock is obtained by the final method.
Where: V is the convertible bond holder's application for conversionTotal amount of Convertible BondsP indicates the price of the stock to be transferred on the current day.

7. adjustment method and calculation formula of the stock price:
After this issuance, when the issuer sends stock dividends, shares are added, new shares or shares are added, and cash dividends are sent (excluding the shares that have been increased due to this issuance of convertible bonds) this will change the issuer's shares. for the adjustment formula, see the release announcement.

8. The conversion price is revised downward.
During the issuance of convertible bondsThe closing price of 15 trading days for any thirty consecutive trading days is lower than 80% of the current conversion price (3.36 RMB/stock)The issuer's Board of Directors has the right to propose a downward correction scheme for the conversion price and submit it to the issuer's shareholders' meeting for deliberation and voting.

9. Conditional redemption terms
If the issuer's A-share stock isThe closing price for at least 15 trading days for 30 consecutive trading days shall not be lower than 130% (including 130%) of the current conversion price (5.46 yuan/stock), The issuer has the rightPrice of interest accrued based on the bond nominal value plus the current periodRedeem all or part of convertible bonds that are not convertible.
The exercise of the conditional redemption right shall be subject to the approval of the China Banking Regulatory Commission.

10. Resale terms:
If the implementation of the fund raising for the issuance of convertible bonds changes compared with the issuer's commitment in the prospectus, and the change is determined by the China Securities Regulatory Commission to change the purpose of the fund raising, the convertible bond holder shall enjoyPrice of an interest payable in the current period plus the nominal value at a timeTo the issuerBack-to-saleThe right to convertible bonds issued this time.

11. This issuance of ICBC convertible bonds does not set a holding period limit.

Summary

1. Major shareholders do not participate in Priority Placement
2. The total amount of online/offline releases is at least 17.534 billion yuan, and the proportion of online/offline releases is
3. Organizations have 5 times of leverage
4. Without considering the stock nature, the holding rate of expiration is 9.6% (excluding compound interest), and the annual value is 1.4578%
5. Compared with the initial conversion price (4.20 yuan/share), the following changes can be made to the conversion price: 3.36 yuan/share and 5.46 yuan/share respectively.
6. Announcement of raising book one day before the trading day (August 25) closing price of the main stock: 4.08 yuan/Stock

Reference

[1] convertible bonds, Baidu encyclopedia, URL
[2] announcement on public issuance of A-share convertible company bonds by Industrial and Commercial Bank of China Limited, Shanghai Securities News, 2010-08-26, URL
[3] Abstract of A-share convertible company bond statement publicly issued by Industrial and Commercial Bank of China Limited, Shanghai Securities News, 2010-08-26, URL