TEXT-S&P: Agile Property's Proposed Securities Have Equity Content
(The following was released by the rating agency)
HONG KONG (Standard & Poor's) Jan. 10, 2013--Standard & Poor's Ratings Services today said it considers the proposed issue of subordinated perpetual capital securities by Agile Property Holdings Ltd. (BB/Stable/--; cnBBB-/--) to have "intermediate" equity content. This means that we would treat 50% of the principal as equity and 50% of the distributions as dividends when calculating financial ratios. The equity content assessment is subject to our review of the final issuance documentation.
These securities are subordinated to all current and future senior debt of the company. Agile has indicated that it will use the proceeds for land purchase, refinancing, and general corporate purpose.
Standard & Poor's does not rate the proposed issue. According to our criteria on hybrid securities and the proposed terms and conditions of the issuance, we would rate these securities at least three notches below the 'BB' long-term issuer credit rating of Agile.
A key feature of the securities is deferral of interest perpetually at the company's option but subject to restrictions regarding dividend payments and share repurchase. Other features of the securities include an increase in interest-rate spread by 25 basis points after 10.5 years and by 75 basis points after 25.5 years, and issuer's right to call (redeem) the securities in July 2018 and every six months thereafter. The securities also have a limited number of additional issuer call rights linked to the occurrence of certain prescribed external events, such as a change in taxation and accounting, and a change of control.
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