Banque Audi to issue $100 million eurobond after buying back GDRs

Banque Audi is preparing to launch a eurobond for up to $100 million and another bond of unspecified amount that can be converted into the bank’s GDRs.

Freddie Baz, Audi’s chief strategist, said on Sunday his bank will offer holders of its outstanding five-year, $100 million eurobond, which matures in November 2001, the option to swap their paper for the new bond.

“The offer will be at a different spread and longer maturity, hopefully 7-10 years,” said Baz.

Audi’s 2001 eurobond carries a coupon of 9.375 percent and an issue spread of 315 basis points over US Treasuries. Baz refused to speculate on the pricing of the new bond, saying it was approved by a general assembly at the weekend.

He said Audi would also issue another convertible bond that would let subscribers buy the GDRs held by the bank.

Last month Audi offered to buy back two million global depository receipts, representing 12 percent of its total shares, at a 20 percent premium to the market price of $17.30. The offer expired last week. Brokers said it resulted in Audi buying one million GDRs for around $20 million.

“We didn’t plan to hold the GDRs forever. The assembly allowed flexibility to link them to a debt instrument,” said Baz.

“This will be  be very appealing issue that mixes the minimum return of debt with an equity upside,” he said.

Audi’s GDRs are trading at $20.60. They have fallen from a high of $31 in 1997 despite rising profits that year and in 1998. Audi recorded a 6 percent drop in 1999 third-quarter profits to $25 million.

The two other Lebanese banks listed in London have suffered similar falls as the economy has retreated and as rating agencies have become more concerned about the country’s worsening public finances, with banks financing the bulk of the $20 billion public debt, equivalent to 130 percent of GDP.

Lebanon’s biggest concerns, such as Byblos, Solidere and Banque Libano-Francaise, attempted to raise debt and capital abroad last year but dismissed the idea because of unfriendly markets and prohibitive premiums.

Credit Libanais, owned by Saudi billionaire Khaled Bin Mahfouz, was the only Lebanese corporate to issue a eurobond in 1999, for three years at a spread of 266 basis points.

However, Lebanese spreads have been generally tightening since the resumption of peace talks between Israel and Syria last month.

Bankers are hopeful that peace between Syria and Israel could end a 22-year long Israeli occupation of south Lebanon and improve the chances of Beirut becoming a regional financial center. - Reuters





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