E-Malt.com News article: Japan: Asahi Breweries to issue $675 million in convertible bonds

Japanese beer maker Asahi Breweries Ltd said it would issue 70 billion yen ($675 million) worth of convertible bonds and use some of the money to finance a buyback of its shares, according to Reuters, May 13.

The issuance of the CBs, effectively switching part of Asahi Breweries' equity to debt, is designed to boost return on equity.

Such a move is still rare in Japan, though the nation's biggest electronics retailer, Yamada Denki Co, announced a similar scheme worth $1.4 billion earlier this year.

Asahi, Japan's second-largest brewer, said it would issue 35 billion yen worth of bonds due in 2023 and another 35 billion yen worth due in 2028.

The company said it would spend 55 billion yen of the money raised to pay down short-term debts used to buy out minority shareholders in Asahi Soft Drinks Co Ltd last year.

The firm said it would also buy back its own shares worth up to 20 billion yen, or 2.1 percent of outstanding shares, between May 14 and Aug. 29.

The issue of zero-coupon CBs would enable the company to minimize debt costs, Asahi Breweries said.

The issuance was also designed to limit dilution by allowing holders to exercise their conversion rights only when the stock closes 25 percent above their strike price for a certain number of days, it said.

Nomura International Plc and Daiwa Securities SMBC Europe Ltd are the lead underwriters for the issue.

($1=103.76 yen)


13 May, 2008