Belgium's GPL prices revised exchangeable bond

Fri Jan 25, 2013 8:02am EST

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London, Jan 25 (IFR) - Belgian industrial holding company Groupe Bruxelles Lambert has priced its EUR1bn exchangeable bond into French electric and gas concern GDF Suez, after withdrawing an earlier offer on Thursday when investors rejected the terms.

The revised deal priced after closing on Thursday with a 1.25% coupon, just 25bp wider than the original guidance and with a premium of 20%.

Despite the relatively minor change to the pricing terms, structural revisions were also made to make the bonds from GBL more attractive to investors.

Under the original terms at launch on Thursday morning, the bonds, representing 2.3% of GDF Suez, would convert into GDF shares at a 20%-25% premium and pay a coupon of 0.375%-1.000%.

Within hours, lack of momentum and orders forced syndicate bankers, GBL and its adviser Rothschild to reconsider and revise the terms.

The structural changes were a reaction to investor complaints that the exchangeables were too bond-like and offered very little exposure to the equity. The equity option represented just 2.5% of the value of the bonds on the launch terms.

In addition to the coupon increase, an investor put was added at three years, which gives investors the option to demand the bonds are repaid early.

The original call option at two years - provided the shares surpassed a 125% trigger on the eventual reference price - increased to a call at three years with a 130% trigger.

"This market changes a lot and we need to be humble about where investors are at any one time," said a banker on the deal.

The exchange price on the bonds is EUR18.32. GDF Suez shares are up slightly on Friday at EUR15.26.

On demand, the geographic split was 48% for UK accounts and 32% for French accounts. On allocation, the book comprised approximately 55% hedge funds and 45% outrights. (Reporting by Robert Venes; Editing by Owen Wild)

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