Mar 20, 2019 (China Knowledge) - Changshu Rural Commercial Bank is set to become China’s first rural lender to be able to redeem its convertible bonds early this year, due to a rally in the company’s stock price.
According to terms set out by the Jiangsu-based bank, the bank will be able to redeem all or part of its unconverted convertible bonds at their face value price and accrued interest for the period should its closing stock price be 30% higher than the conversion price for at least 15 out of 30 consecutive trading days.
Last January, Changshu Rural Commercial Bank had issued RMB 3 billion worth of convertible bonds with a conversion price of RMB 5.76. Since then, the company has seen its stock price surge to RMB 7.89 per share as of yesterday’s close, 37% higher than the issued conversion price.
In addition, the company’s shares had managed to close above the redemption price of RMB 7.49 per share for 15 days during the period from February 25th to March 18th this year, allowing the bank to redeem the bonds early. The bank’s board has since approved the redemption.
Changshu Rural Commercial Bank which was founded in 2001 was one of the country’s first rural commercial lenders and the first one to be wholly-owned by private capital. The company posted a 16.2% increase in operating revenue last year to RMB 5.8 billion while net profits also rose 18.1% to RMB 1.5 billion.
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