French luxury goods group Kering has announced the launch of an offering of bonds exchangeable into existing ordinary Puma shares (PUM.DE) amounting to EUR €500 million (or USD $550 million). Kering holds a stake of 15.7% equity in Puma.
In an official press statement released on September 25, Kering noted that all the proceeds from the bond issuance would be channeled towards the group’s corporate activities.
Kering will issue the bonds at a principal cost of EUR €100,000 per bond with no interest. The issue price will range between 107.25% and 108.75% of the Principal Amount corresponding to an annual yield-to-maturity of between –2.78% and -2.32%.
Redeeming The Bonds
Investors will be able to redeem their principal amount at maturity, which has been set on September 30, 2022. Furthermore, investors who wish to redeem their bonds before maturity will have to meet certain conditions set by Kering.
According to Kering, investors should redeem all their bonds but not partly in case they opt for an earlier date. Investors will be free to redeem the bonds from September 30, 2021, after issuing a notice of 40 days earlier.
Kering has informed potential investors that the bonds may be redeemed at the option of the bondholders in case of change of control or a delisting. For early redemption, the issuers will be given an option to deliver existing ordinary shares in Puma and an additional amount in cash.
With the bonds, holders will be able to exchange the bonds for existing Puma shares from the 41st day after the issue date to the 19th business day preceding the maturity date. After the bonds have been swapped, investors have the option to pay in cash all or part of the value of the Puma shares instead of delivering existing shares.
Note that the initial exchange price is open to adjustments in case we have the occurrence of corporate events like cash dividends, as stipulated in the terms and conditions of the Bonds. Kering is set to announce the full terms of the bonds later after the placement.
Investors Outside Europe
Kering will on September 30, 2019, issue the settlement offer for the bonds while the application for admission of the bonds to trade on the open market will take place after 30 days.
For investors in the US, South America, Canada, Japan and Australia, the bonds will be offered through an accelerated book-building process via a placement to institutional investors only.
Kering is a a global Luxury group that manages the development of a series of renowned Houses in Fashion, Leather Goods, Jewelry and Watches including Gucci, Saint Laurent, Bottega Veneta, Balenciaga, Alexander McQueen, Brioni, Boucheron, Pomellato, Dodo, Qeelin, Ulysse Nardin, Girard-Perregaux, as well as Kering Eyewear. By 2018, Kering had nearly 35,000 employees and revenue of €13.7 billion.