KUALA LUMPUR (Feb 16): Khazanah Nasional Bhd has successfully completed the sale of rights shares attached to the CITIC Securities Co Ltd shares that form part of the exchange property under the Malaysian sovereign wealth fund’s US$320.8 million (about RM1.34 billion) five-year exchangeable Islamic bonds or sukuk which give holders the option to receive cash or CITIC shares upon exchange.

In a statement dated Monday (Feb 14), Khazanah said adjustments were made to the exchange property comprising cash and CITIC shares in respect of the cash-settled exchangeable trust certificates due 2023 referencing H-shares of par value of RMB1 each in CITIC.

Khazanah said its Labuan-incorporated special purpose vehicle Cindai Capital Ltd is the issuer of the exchangeable trust certificates.

"On Feb 11, 2022, Khazanah had successfully completed the sale of the rights, pursuant to the proposed rights issue, attached to the CITIC shares that form part of the exchange property. 

"Pursuant to condition 7(f)(i) of the conditions of the certificates, the exchange property shall be increased by HK$39.33 million (HK$39,334,474.79) in cash, which is equivalent to the aggregate realisable value of rights attributable to the CITIC shares. 

"Consequently, the exchange property has been adjusted to 93.58 million (93,579,192) CITIC shares and HK$218.16 million (HK$218,160,170.40) in cash effective from Feb 11, 2022. The pro rata share of the exchange property attributable to each US$1,000 nominal value of certificates for the calculation of the cash settlement amount has been revised to 294.5594 CITIC shares and HK$686.70 in cash,” Khazanah said.

In securities trade terminology, H-shares refer to shares of mainland China firms which are listed on The Stock Exchange of Hong Kong Ltd and other foreign bourses.

Khazanah via Cindai had in 2018 issued the exchangeable sukuk. In a statement on Jan 18, 2018, Khazanah said the exchangeable sukuk, which was structured based on the Islamic principle of Wakalah, provides the sukuk holder with the option to receive cash or shares upon exchange.

A total of 78 investors subscribed to the exchangeable sukuk and they comprise long-only funds, hedge funds, arbitrage funds as well as asset managers across Asia and Europe, according to Khazanah.

"CITIC Securities will be Khazanah’s eighth offering in an exchangeable sukuk format, since the inaugural issue of Telekom Malaysia Bhd exchangeable sukuk in 2006. The various issues have all been successfully implemented, winning multiple international awards over the years.

"The exchangeable sukuk will be listed on the Singapore Exchange Securities Trading Ltd, Labuan International Financial Exchange Inc and Bursa Malaysia (under the exempt regime).

"CIMB and J.P. Morgan are the joint bookrunners and joint lead managers for this exchangeable sukuk transaction,” Khazanah said then.