September 22, 2011, Kejie was awarded “Debt and Equity-Linked Deal of the Year” for our representation of Sino-Ocean Land on its US$900 million convertible securities offering by China Law & Practice.

The finalists of this award include Hopewell Highway Infrastructure Rmb Bond, Chong Hing Subordinated Bond, China SCE High Yield Issue and China Oriental Note Issue.

China Law & Practice’s Comments on this deal

Sino-Ocean Land’s US$900 million convertible securities offering was the first corporate-hybrid offering issued by a Hong Kong-listed company, the largest international equity-linked issuance for a mainland Chinese property developer and the first of its kind in Asia ex-Japan. It utilised a complex capital instrument that was convertible in nature and though debt-like, actually afforded equity treatment. This structure had never been used before in Asia, but under the market conditions, it was a good fit for Sino-Ocean Land Holdings. The perpetual subordinated convertible securities met the issuer’s needs and appetite of its investors since it wasn’t going to drive up the debt-to-equity ratio. The issuance was also in compliance with existing agreements.

Negotiating terms and conditions proved complicated as there wasn’t a benchmark for this new type of convertible bond offering. Credit events had to be formed and a unique lever in the structure was created so that instead of accelerating the perpetual securities and opening the door for investors to demand the right to be repaid, the lever was that the perpetual securities couldn’t pay anyone back. Ultimately, the offering was completed successfully and blazed a trail for other similar companies, such as Franshion Properties, to raise funds offshore by adopting the same perpetual securities structure.