In order to implement the requirements of the China Securities Regulatory Commission (CSRC) for the pilot program of reform in targeted convertible bonds, give full play to the positive role of the targeted convertible bonds in mergers and acquisitions and reorganizations and refinancing, and effectively serve the market participants of targeted convertible bonds, since 2019, the Shanghai Stock Exchange (SSE) has conducted extensive research on the issuance, transfer, conversion to shares and other businesses of targeted convertible bonds, formulated the business plan and launched the IT development for the targeted convertible bonds. On December 24, 2019, Suzhou Secote Precision Electronic Co., Ltd. (603283), a company listed on the SSE main board, completed the first registration for targeted convertible bond issuance on the SSE, and used the targeted convertible bond to pay RMB126 million for the restructuring consideration. Up to now, the SSE has accomplished the registration of targeted convertible bond issuance for 6 listed companies. Nearly RMB2 billion in total was paid with the targeted convertible bonds for restructuringconsideration, and the auxiliary fundraising exceeded RMB5 billion, which has strongly supported the M&A and reorganization and refinancing of the listed companies.
Recently, in order to clarify to the market the standards for listing, transfer, conversion to shares, sell-back, information disclosure and other businesses for targeted convertible bonds, and to make targeted convertible bonds a standardized securities product that is “well received in the market with transparent rules and high liquidity”, the SSE has extensively listened to the opinions of listed companies, intermediaries and investors, and comprehensively considered the differences and feasibility of the individualized provisions of the targeted convertible bonds of various listed companies, before drawing up the “Shanghai Stock Exchange Implementation Measures for the Business of Issuing Convertible Corporate Bonds to Specific Targets by Listed Companies (Exposure Draft)” (the Implementation Measures for short). The SSE is now soliciting public opinion from the market on the Implementation Measures.
According to an SSE official in charge of the business, the targeted convertible bonds will be transferred and converted through the SSE’s trading system. The relevant business arrangements in the Implementation Measuresfor targeted convertible bonds can basically meet the requirements for executing the individualized provisions of existing targeted convertible bonds on the trading system, and investors can complete the transfer, conversion to shares, sell-back and other orders and operations for the targeted convertible bonds online. With the business rules further defined, the development of the targeted convertible bonds as a payment tool and financing instrument for listed companies' M&A and reorganization will accelerate. At present, the SSE has put into use a designatedcode segment for the registration, transfer, conversion to shares, sell-back and other businesses of targeted convertible bonds, and the IT development of the trading system is steadily moving ahead.
Going forward, the SSE will further enhance market services, smoothly and orderly push forward the pilot program for targeted convertible bonds, extensively listen to opinions and suggestions in the market, and carefully formulate the Implementation Measures so as to fully meet the market-oriented needs of the listed companies in M&A and reorganization and refinancing,and facilitate the quality improvement of listed companies.