BANGKOK, 26 June 2020: Minor International, a global hotel operator headquartered in Bangkok, announced in a statement to the Stock Exchange of Thailand, Tuesday, a new debenture issue of USD300 million.
Minor International Public Company Limited confirmed the new debenture offering, available to foreign institutional investors, would be used for “refinancing existing debt and for working capital purposes.”
Described as USD Guaranteed Senior Capital Securities, the coupon is 3.10% per annum, fixed-rate and paid semi-annually until the first call date 29 June 2023.
Major hotels are using the issue of debentures to shore up cash flow and maintain staffing and operations during the ongoing Covid-19 crisis. In Thailand, the Minor International faces the additional challenge that international tourism has been closed down, and hotels must rely on the domestic travel market. However, many Tha destinations, particularly beach resorts in the south, rely almost entirely on international tourists.
A debenture is a type of debt instrument unsecured by collateral. Both corporations and governments frequently issue debentures to raise capital or funds, according to Investopedia.
“Corporations also use debentures as long-term loans. However, the debentures of corporations are unsecured. Instead, they have the backing of only the financial viability and creditworthiness of the underlying company. These debt instruments pay an interest rate and are redeemable or repayable on a fixed date. A company typically makes these scheduled debt interest payments before they pay stock dividends to shareholders. Debentures are advantageous for companies since they carry lower interest rates and longer repayment dates as compared to other types of loans and debt instruments.”
(Source on debentures: Investopedia)