Home Inns (HMIN) new issue 12/15/10

$160m(24m) sen unsec cb tonight from JPM.CS. Terms: 5yr, 2-2.5% up 20-25% UOP = strategic acq/gcp. Leading Chinese hotel chain in 134 cities (404 leased/324 franchised). 54 lease/60 franchise in construction w/250 exp for ’11 (opening 50 midscale hotels under Yitel brand within 4-5 yr). Occ rate = 96.7% vs 91.5% FY09. liq good 3Q10 debt/cap & debt/ebitda = 5.6% & 0.1x w/cash = cRMB 1B & LTM ebitda = RMB816m. Debt=small o/s 0% 12 cb. Capex FY 2011 exp to up to RMB840m. Despite strong positioning it is v sensitive to econ (08 results poor & 0% 12 cb < 50c). Acq & lack of assets risks. We’ll use L+550. Low ADV = 424m, use 30 vol & 75bp brw blend. Theo = 101.125. About China Story not model. Recent small deals all done well. Push for mids.

By convertarb, on December 15, 2010 at 4:34 pm, under Convert New Issue Analysis. No Comments
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