Case study

 The Keppel T&T Convertible

by Professor Ian H. Giddy
New York University


Keppel Telecommunications and Transportation Limited provides telecommunication services and trades in communication systems. The company also owns, charters and manages ships. Other activities include warehousing, freight forwarding, container services and air freight services. Communication systems which are traded include PABX systems, public handphones, facsimile machines, pagers and voice mail systems. Telecommunication services accounted for 71% of 1999 revenues; shipping, 18% and logistics, 11%. 

Keppel T&T to raise US$100m for expansion 

Wednesday, December 01 1999 

SINGAPORE--Keppel Telecommunications & Transportation (Keppel T&T) plans to sell up to US$100 million of convertible bonds to fund its telecom and Internet-related business expansion in Asia.

Plans are to issue US$85 million in bonds with an additional US$15 million if demand is huge. The three-year bonds can be converted into Keppel T&T new ordinary shares at S$2.46 per new share. Upon full conversion of the US$100 million bonds, 68,292,682 new shares will be issued. This represents about 15 percent increase in Keppel T&T's existing issued share capital.

Said Teo Soon Hoe, chairman of Keppel T&T: "Keppel T&T will provide a comprehensive suite of Internet and e-commerce solutions to corporate enterprises. We are also strengthening our position in the high-speed wireless communications area through our telecom engineering arm and MobileOne."

The company intends to invest in Internet and wireless communications firms. It hopes to develop products that deliver combined voice, data, video and fax capabilities over the Internet for the corporate market.

An application has been made to list the bonds on the Luxembourg Stock Exchange. The bond issue is awaiting approval from the Stock Exchange of Singapore and Keppel T&T shareholders.

Robert Fleming & Co will lead manage the bond sale, with Keppel TatLee Bank as the local sales coordinater and Jardine Fleming Singapore Securities handling the sales arrangement.

Keppel T&T owns part of Internet service provider DataOne (Asia) which has not started operations. Keppel T&T also has a 35 percent equity stake in mobile operator MobileOne (M1). It has recently invested in Israeli Internet communications software company Imagine.

Local conglomerate Keppel Corporation owns 72 percent of Keppel T&T.

98% match; AFX (AP) - Asia ; 30-Nov-1999 01:41:44 am ; 137 words

Keppel Telecommunications & Transportation Ltd said it is raising up to 100 mln usd through the issuance of three-year convertible bonds. 

The company said it intends to issue an initial 85 mln usd worth of bonds and has an option to issue an additional 15 mln usd in case of oversubscription. 

The bonds are convertible after three years to new KeppelT&T shares at 2.46 sgd per share. The conversion price may change depending on unspecified circumstances, it said. 

If fully converted, the bonds will account for 15 pct of the company's enlarged issued share capital, it said. 

Proceeds from the bond issue, which will be arranged by Jardine Fleming Singapore and Keppel TatLee Bank, will be used to finance the company's expansion into telecommunications and internet-related businesses. 

09-Feb-2000 12:00:00 am 

Keppel Telecommunications and Transportation Ltd 1999 results:

Net profit pre-extras - 22.378 mln sgd vs 12.926 mln

Net profit - 26.065 mln sgd vs 3.726 mln

Sales - 391.798 mln sgd vs 369.227 mln

Pre-tax profit - 25.8 mln sgd vs 18.8 mln

EPS - 5.4 cents vs 3.9

Final div - 9 pct vs 7


99% match; AFX (AP) - Asia ; 29-Jun-2000 12:00:00 am ; 261 words

Keppel Telecommunications & Transportation Ltd is expecting its revenue to reach 1.0 bln sgd, partly reflecting additional contributions from its e-business ventures, managing director Ng Eng Ho said. 

Profits, he said, are likely to post a compounded annual growth rate of 30 pct over the next four years. 

In 1999, KeppelT&T's revenue rose 6.1 pct year-on-year to 391.8 mln sgd, while net profit before extraordinary items grew 73 pct to 22.38 mln. 


Ng said the company's e-business initiatives will provide revenue of about 250 mln sgd by 2004. 

The infrastructure needed for this business should be finished by yearend so it should start contributing revenue in the second half of 2001. 

"We expect it to be profitable by 2002," he added. 

KeppelT&T has so far invested about 50 mln sgd to build up its e-business portfolio which includes D1Asia, ASP1, Adroit Innovations, Netrust, Apac BizInfo and Arrel Communications and Software. 

Over the next two years, it is planning to spend 200 mln sgd, Ng said. 

"Our vision is to be the e-business partner of choice for business enterprises in Asia." 

E-business will eventually become Keppel T&T's third core operation, the first two being telecommunications and logistics. 

It will focus on the business-to-business segment of the market, initially concentrating in Singapore, Malaysia, Thailand and the Philippines. 

Ng said the company will develop content through alliances with local players and possibly taking equity positions in strategic companies. 


Ng said the management is planning to list two of its e-business units, including D1 Asia and Apac BizInfo, "within the next 12 to 18 months. 

D1 Asia is a wholly-owned unit of Keppel T&T. It provides clients with backroom web hosting and co-server location services. 

Credit ratings provider Apac BizInfo, meanwhile, is 50 pct owned by KeppelT&T. The remaining 50 pct is owned by BayCorp Holdings Ltd of New Zealand and Dun & Bradstreet. 

  • Why would Keppel T&T issue a convertible bond rather than a conventional bond -- or equity?
  • What was the effective cost of financing to Keppel T&T of this form of financing?

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