On December 3, 2019, King-Strong New Material Technology Co. Ltd. (hereinafter referred to as “King-Strong”), a listed company on ChiNext, completed the registration of issuing a private placement convertible bond for asset purchase (code: 124001). It is the first A-share private placement convertible bond completed registration, marking the formal launch of the private placement convertible bond product.
As an innovative restructuring payment instrument, private placement convertible bonds enrich the payment methods of consideration, better meet the diversified needs of trading parties, and provide a rich set of transaction schemes. What’s more, it is also conductive to reducing the pressure from cash shortage of listed companies and mitigating the risk of equity dilution of substantial shareholders. On November 1, 2018, the CSRC piloted private placement convertible bonds for M&A to support listed companies. Since then, 35 companies market-wide have disclosed M&A schemes using private placement convertible bonds as a payment instrument in succession, involving more than RMB40 billion in M&A, among which 26 companies are SZSE-listed companies, involving nearly RMB20 billion in M&A. However, it is worth mentioning that more than half of the above companies issued private placement convertible bonds to raise matching funds as well, further expanding the direct financing channels of listed companies.
SZSE fully implemented the relevant work requirements of the CSRC by giving full play to the positive role of private placement convertible bonds in M&A and facilitating the delivery of such bonds from transaction guidance, code distribution and system updating. First, SZSE smooths the issuing registration process, provides special guidance to the listed companies interested in relevant business, and studies the company-specific issuance scheme. Second, SZSE sets private placement convertible bond as an independent security with its unique code range of 124XXX and standardizes its follow-up management. Third, SZSE strengthens communication and coordination with CSDC Shenzhen Branch to upgrade relevant systems and provide technical support for business management.
An official of SZSE said, SZSE would further optimize the business procedures for the registration, conversion and assignment of private placement convertible bonds based on this first product, so as to provide more convenient and efficient services for listed companies. It would also steadily advance the pilot work of private placement convertible bonds and constantly enhance the marketization of M&A to fully stimulate the vitality of the market for a continuous quality improvement of listed companies.
