Adama TASE bond offering oversubscribed

Chen Lichtenstein

The agricultural insecticide company raised NIS 690 million in bonds.

Less than 48 hours after announcing its plan to raise NIS 600 million in a private bond placement for investment institutions, Adama Holding Ltd. (TASE:ADMA.B1) (formerly Makhteshim Agan) today reported that it had completed an even larger offering, following demand that amounted to over three times the planned volume.

Adama, the world's largest manufacturer of unbranded agricultural insecticides, headed by CEO Chen Lichtenstein, reported the completion of a NIS 690 million bond issue through the issuing of NIS 533 million in par value of additional bonds for its long-term Series B. Participants in the offering also received options to purchase additional bonds totaling NIS 267 million in par value; if exercised, the volume of the issue will rise by an additional NIS 350 million. S&P Maalot rates the bonds AA-.

The offering was made at NIS 1.293 per Series B bond, reflected an annual yield to maturity of 4.54%, 0.2% higher than yesterday's closing price of NIS 1.291. As a result of the strong demand, the institutions participating in the offering, which included insurance companies and provident funds, received only 87% of what they ordered. After the offering was completed, Adama CEO Chen Lichtenstein said, "The company thanks the investors for their strong response."

Series B bonds, which are linked to the Consumer Price Index, is Adama's largest bond series, with a total of NIS 2.75 billion in par value. The series, which bears 5.15% interest and has an average duration of 9.9 years, is due for repayment in 2020-2036. Before the offering, the bondholders included Altshuler Shaham Ltd. (NIS 189 million in par value), Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL) (NIS 183 million), Harel Insurance Investments and Financial Services Ltd. (TASE: HARL) (NIS 80 million), and Psagot Investment House Ltd. (NIS 73 million).

Adama has more than once stated unequivocally that despite the large volume planned for the issue, the bond proceeds would be used to recycle debt to the banks and the bondholders, and that the measure was related to the company's plans for acquiring three companies in China.

Adama repaid NIS 380 million in principal at the end of November to its Series D short-term bondholders, and also paid NIS 117 million in interest to holders of its Series B and Series D bonds. At the end of May 2015, it will have to pay interest totaling NIS 105 million to holders of bonds from the two series, and the same amount in November, while at the same time repaying NIS 380 million in principal on its short-term bonds. The company also plans to repay during the year some of the loans it received in the framework of the lines of credit totaling NIS 800 million granted it by Israeli banks.

Adama's management is now considering alternatives for completing the company's acquisition from ChemChina, the controlling shareholder in Adama, of shares in Chinese chemicals and insecticides manufacturing companies. Adama failed to complete its share offering on the New York Stock Exchange at a minimum company value of $2.2 billion, before money.

The deal with ChemChina includes the acquisition of 20% of the shares of Chinese insecticide and chemical manufacturer Sanonda Holdings, in addition to the 11% already held by Adama. Ownership of Anpon, Maidao, and Huaihe, which operate in geographically adjacent locations in Jiangshu Province and have been Adama's operating center in China, will also be acquired.

Adama is due to pay ChemChina $340 million for this deal, while also assuming liabilities totaling $300 million. Lichtenstein, who led the acquisitions and supports completing them, will have to select the right way of carrying the out the deal from the possibilities: long-term bank credit, owners' loans from ChemChina, and an issue of shares to ChemChina, which will reduce Discount Investment Corporation's (TASE: DISI) holdings in the company.

Published by Globes [online], Israel business news - www.globes-online.com - on January 22, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

Chen Lichtenstein
Chen Lichtenstein
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