ESTERAD OFFERS $19M CONVERTIBLE BONDS

31/01/2010 00:00 AST

A BD7 million ($18.6m) convertible bonds offer by Esterad Investment Company will close Today.

Shareholders registered on December 31 last year and the general public in Bahrain and the region can subscribe until today.

The bond embeds a call option on the stock exercisable at the discretion of the bondholder at the end of years three, four and five.

The call option allows every bondholder to convert each bond held into a specific number of ordinary shares in the company.

Interest on the bonds is paid semi-annually with bullet principle redemption at maturity.

The potential return on this new instrument is a hybrid between debt and equity.

The bonds offer a fixed coupon but more interestingly significant capital gains in the event that the stock price increases.

Therefore, the lower limit on the return of the bond is 4.5 per cent per year and the upper limit is linked to Esterad's performance between three and five years.

This instrument gives the return guarantee of a standard bond while placing bondholders in a perfect position to capitalise if markets pick up over the next five years.

Esterad has been conserving its cash position over the past year in anticipation of its $25 million bond maturing in the middle of this year.

The proceeds from this bond are expected to help Esterad capitalise on the current market downturn and fund Esterad's well-diversified investment strategy targeting investment opportunities across all asset classes in regional and global markets.

Gulf Daily News