ICTSI unit to issue perpetual bonds

MANILA, Philippines - Royal Capital B.V., a majority-owned unit of port operator International Container Terminal Services Inc. (ICTSI), will issue perpetual bonds to fund its expansion.

In a disclosure to the stock exchange, ICTSI said it would guarantee the issuance of the subordinated securities subject to its board’s approval of the size, interest rate and other terms of the offering.

A perpetual bond has no maturity date. It is not redeemable and pays the bondholder a fixed coupon while in possession.

Although there is usually no set maturity date, perpetual bonds may be structured to allow the bonds to be callable after a set period of time, usually between five and 10 years. This is especially important if the interest rates fall sharply and issuer needs to reduce the interest cost.

ICTSI said these bonds will be consolidated to form a single series with the $200 million subordinated guaranteed perpetual capital securities issued in May last year.

Royal Capital has appointed Hongkong & Shanghai Banking Corp. Ltd. and Citigroup Global Markets Ltd as joint lead managers for the offering.

The proceeds of the offer will be used for the development of greenfield projects, potential acquisitions and general corporate purposes.

ICTSI has set aside $21 million of its retained earnings to partly fund its capital expenditures.

To further beef up its presence overseas, ICTSI aims to acquire new terminal concessions in Asia, Australia, the Indian subcontinent, the Middle East, Africa, Europe, and North and South America.

The company recently set up a unit in South Africa, to handle new assets on the continent.

Over the past two years, ICTSI has been buying ports abroad which include the Port of Portland in the United States, and facilities in Mexico, India and parts of Eastern Europe.