Aspial Corporation Limited: Bond Exchange Offer

Timothy Ang  |   08 Jan 2021  |    93 views

We attended a company update on Aspial Corporation. Here are the highlights:

Exchange offer

Major noteholders of Aspial have expressed their interest to extend their bond investments. As such, issuer Aspial Treasury Pte. Ltd. and guarantor Aspial Corporation Limited have announced an exchange offer for the group’s existing notes maturing in 2021. The notes are: a 5.90% note due 19 April 2021, outstanding S$50mn; and a 6.25% note due 11 October 2021, outstanding S$115mn. In exchange, the new note will pay 6.15% per annum semi-annually. Issuance is expected on 22 January 2021 for a 4-year tenure. Maturity is 22 January 2024.

Early exchange fee

Noteholders who accept the offer before the early exchange deadline of 5pm on 14 January 2021 will be paid an early exchange fee of 0.3% of the principal amount of the new note. Noteholders who accept the offer after the early exchange deadline and before the offer expiry at 10am on 18 January 2021 will be paid a normal exchange fee of 0.15%. Accrued interest will also be paid to noteholders.

Noteholders who do not accept the exchange offer will continue to hold their existing notes until their respective maturities.

Healthy financial covenants

Aspial still has ample headroom over its financial covenants. As at 1H20, its tangible net worth was S$425mn vs the minimum S$225mn. Net debt to equity was 2.11x vs the maximum 4x. Secured debt to total assets was 37% vs the maximum 70%. The company’s covenant financials were stable in 1H20. Total tangible net worth of S$425mn was around its 4-year average of S$403mn. Net debt to equity of 2.11x was at its 4-year low; the 4-year average was 2.76x. Secured debt to total assets was at its 4-year average of 37%.

High bond ownership

More than 70% of existing Aspial bonds are held by the company directors, representing direct and substantial management alignment with noteholders. A change of shareholding event for Aspial bonds is deemed to occur when Mr Koh Wee Seng (CEO), Ms Ko Lee Meng (Director) and Ms Koh Lee Hwee (Director) cease to own in aggregate more than 50% of Aspial’s issued share capital. In such a case, noteholders can opt for early redemption of their bonds.

Resilient financial services

Aspial’s pawnbroking business was resilient during COVID-19, underscoring its recession-proof nature. Pawnbroking and jewellery trading revenue was higher in 1H20 (figures not disclosed). However, Aspial’s retail jewellery and bullion businesses were softer due to store closures, but were aided by grants and rebates to cover staff and rental costs. Overall, financial services pretax profit was 76.9% higher YoY, to S$12.1mn in 1H20.

Australia 108 completed

Aspial completed its residential skyscraper and Australia’s second-tallest building in Melbourne in October 2020. Settlement activity is moving smoothly and revenue recognition is on course. Australia’s property market has also picked up, with higher volumes sold and higher property prices since mid-2020 to end the year positive. This can help with the sale of unsold units. The timeline for settlement for most property purchases is 3-6 months.

australia 108 melbourne


Given the high level of internal support for Aspial’s bonds, we think the bond exchange offer will progress smoothly. The exchange will help conserve Aspial’s cash and financial flexibility. Without the exchange, cash of S$65mn and estimated FY19 EBITDA of S$93mn add up to S$158mn may be insufficient for paying off the S$165mn combined notes maturing in 2021.

We think the exchange offer is worth looking at for continued exposure to Aspial. Management’s high direct interest in Aspial’s bonds has reduced Aspial’s free float and liquidity, making it difficult to purchase its existing bonds in the open market.

Related Articles

Sembcorp Industries 4.6% 7Yr Senior Green Bonds

Sembcorp Industries (SCI) recently announced the issuance of its Senior unsubordinated Green bonds at a final price guidance of 4.6%.

Shawn Sng  |   09 Mar 2023

Hotel Properties Limited 5.25% 5Yr Senior SGD

Hotel Properties recently announced the issuance of its Senior unsubordinated bonds at a final price guidance of 5.25%.

Shawn Sng  |   02 Mar 2023

Barclays PLC 7.3% AT1 Perpetual SGD

Barclays PLC recently announced the issuance of its additional tier 1 perpetual notes at a final price guidance of 7.3%.

Shawn Sng  |   01 Mar 2023


These commentaries are intended for general circulation. It does not have regard to the specific investment objectives, financial situation and particular needs of any person who may receive this document. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of the units and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. Investors may wish to seek advice from a financial adviser before investing. In the event that investors choose not to seek advice from a financial adviser, they should consider whether the investment is suitable for them.

The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the "Research") contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries.

Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned.