China Fish

China Fish: announces US$300m issue of 9.75% fixed rate unsecured notes, maturing 30 July 2019. This compares with a previous issue of 7 yr senior notes totaling US$225m in Dec ’06, with an interest rate of 9.25%. The latest notes issue are non-investment grade, rated Ba3 by Moody’s, BB- by S&P, and BB by Fitch Ratings. Estimated net proceeds are ~US$290m, to be used to i) fund the expansion of the Group’s fishing operations in the North Pacific Ocean, including but not limited to prepayment of an existing long term supply agreement and entering into new long term supply agreements, ii) repay outstanding debt, and/or iii) working capital. DBSV expresses surprise by this issue, but remains neutral at this stage. Notes that the funds needed for the North Pacific Ocean operations amount to US$150m – 200m, leaving about US$100m to be deployed, which will accrue interest cost of ~US$9m a yr. Highlights there is uncertainty regarding the deployment of remaining funds at this stage. Nevertheless, the house makes no change to its Buy rating with TP $1.32.