IN DEPTH: 361 Degrees Plans Debut USD Bond Offering

2016-05-24 03:32:57.607 GMT

By Annie Lee

(Bloomberg) -- Co. may price a $bench 5NC3 bond today, IPT 7.75% area, according to a person familiar with the offering.

It will be the Chinese sportswear manufacturer’s 1st USD bond: Bloomberg data
Issuer has a CNH1.5b 7.5% 2017 Dim Sum sold in Sept. 2014 outstanding; it was at 8.3% as of 11.28am in H.K.: Bloomberg prices
China’s sportswear industry has a relatively bright outlook given continued growth in disposable incomes, Charles Macgregor, head of Asia at Lucror Analytics, says in a note yesterday
The issuer’s small scale and market share are of concern and the significant amount of cash held raises questions over management’s objective in issuing debt: Macgregor
"We give limited credit for the cash held, given that it could quickly dissipate in times of stress,” he says
S&P expects 361 Degrees to continue to generate good operating cash flow and “sustain its debt to EBITDA ratio at comfortably below 3x over the next 12 months,” it says in a note yesterday

Related story: 361 Degrees 2015 net profit rises 30% y/y, beats estimate

BOND TERMS

Issuer: 361 Degrees International Ltd
Subsidiary guarantors: Certain non-PRC subsidiaries of the issuer
Issuer ratings: --/BB/BB
Exp. issue ratings: --/BB/BB
Reg S
Optional call schedule: After yr 3 at par +1/2 coupon rate; after yr 4 at par +1/4 coupon rate; par at maturity
UOP: General working capital including repaying existing debt
Covenants: Customary HY package
Sole GC, BR & LM: BofAML

*Information in this section also from person familiar, who isn’t authorized to speak publicly and asked not to be identified

To contact the reporter on this story:
Annie Lee in Hong Kong at olee42@bloomberg.net

To contact the editor responsible for this story:
Tom Freke at tfreke@bloomberg.net