HK City Telecom launches bond buyback
HONG KONG, July 10 (Reuters) - City Telecom, a Hong Kong-based fixed line operator (1137.HK) says it is buying back up to $89.4 million of its bonds to utilise some spare cash.
The company said it was buying back its dollar bonds due in 2015 178677AB6=RRPS and also paying its bondholders a fee for allowing amendments to some of the bond covenants.
It is paying bondholders US$980 for every US$1,000 due in principal amount. The payment includes US$20 paid as a consent payment.
"The reason for the bond buyback is to reduce the negative carry on our bonds, as we are generating substantial free cash flow beyond our organic needs," a company official told Reuters in an emailed response on Wednesday.
The bonds are not actively traded but, according to Reuters data, the bonds were quoted at 93.625/94.625 cents to a dollar on Tuesday for a yield of around 10 percent.
Last month, Fitch Ratings revised the outlook on City Telecom's BB-minus to positive from stable.
"The positive outlook could lead to a rating upgrade if CTI is able to demonstrate its ability to record steady subscriber growth while maintaining its current 30 percent EBITDA margin over the next 12 to 24 months," the agency said. (Reporting by Umesh Desai; Editing by Anne Marie Roantree)
