ND PAPER (HKEX: 02689) shares climbed more than 4% in trading. At the time of writing, the stock was up 3.87% to HK$7.24, with a turnover of HK$97.445 million.

The upward movement follows the company's announcement that it has initiated a cash tender offer to repurchase any and all of its outstanding US$400 million 14.00% senior perpetual capital securities.

Analysis of the Bond Terms and Repurchase

The US$400 million perpetual bond was issued in June 2024 for general corporate purposes. It has no fixed redemption date and carried a fixed annual coupon rate of 14% for the first three years until June 2027, translating to annual interest expenses of approximately 400 million yuan. Management and related holders collectively own 81% of this bond.

The repurchase offer includes an early bird premium of 7%. Notably, the management team has voluntarily waived this premium, committing to accept the general repurchase price after the early bird period. This move is estimated to provide a combined concession to other bondholders of about US$23 million.

Financial Impact and Strategic Implications

The company plans to fund the repurchase using proceeds from a recent 2 billion yuan syndicated loan facility and its own internal funds. Analysis suggests that upon full redemption of the perpetual bond, the company's annual interest expenses could decrease by roughly 300 million yuan.

The initiation of this repurchase is seen as fulfilling a prior commitment made during a public earnings briefing to redeem the bonds early. The management's decision to forgo the premium payment is viewed as a strong demonstration of their long-term confidence in the company's prospects.