Home Inns sets bond conversion at 37 pct premium

HONG KONG, Dec 5 (Reuters) - China's Home Inns & Hotels Management Inc's (HMIN.O: Quote, Profile, Research, Stock Buzz) 1.1 billion yuan ($148.6 million) zero-coupon convertible bonds will be converted into shares at a premium of 37 percent to the reference price, a term sheet said.

The bonds will be converted at US$53.09, the middle of the indicated range of $52.31 to $54.25 set by the issuer. The reference price is Monday's closing share price of $38.75.

Home Inns, a Chinese budget hotel operator listed on the Nasdaq exchange late last year, sold the bonds due on Dec. 10, 2012, with a 3-year put option to raise funds for acquisitions and new leased-and-operated hotel deals.

The proceeds will also be used to finance working capital and for general corporate purposes.

The bonds are convertible between Mar. 9, 2008 and Nov. 30, 2012.

Credit Suisse (CSGN.VX: Quote, Profile, Research, Stock Buzz) and Merrill Lynch (MER.N: Quote, Profile, Research, Stock Buzz) are the joint bookrunners for the sale.

The issue comes in a booming year for convertible bond issuance in the region, although the global credit crunch has scuppered some recent debt offerings.

Data from publisher Thomson Financial showed issuers in Asia Pacific excluding Japan raised a record $31.5 billion via such instruments so far this year.

That represents a growth of 85 percent over 2006, as top issuers such as Tata Steel (TISC.BO: Quote, Profile, Research, Stock Buzz), with a $2.3 billion offering, drove up deal volume.