In March 2016, Shantian Forestry Development (Fujian) Co., Ltd. (“Shantian Forestry”) gained approval for a private offering of convertible bonds from Shenzhen Stock Exchange. Senior partner Qi Wei and associate Chen Wei from Dentons Fuzhou office advised the company on relevant legal issues.

Convertible bonds, issued by shareholders of a public company according to law, are a type of corporate bonds that could be converted to shares of common stock pursuant to agreed terms within a certain time limit. They are deemed as a tool for market value management, debt finance, and liquidity management.

Shantian Forestry is the controlling shareholder of Zhongfu Straits (Pingtan) Development Company Limited (“Pingtan Development”, stock code: 000592). Pingtan Development was set up in 1993 with approval from Fujian Economic Structure Reform Commission (now Fujian Development and Reform Commission) and went public in March 1996 at Shenzhen Stock Exchange. It is the first A share-listed company that has taken root in Pingtan.

The convertible bonds were issued privately to qualified investors with a maturity of no more than two years. Huatai United Securities Co., Ltd. acted as underwriter and bond trustee. Shantian Forestry, the issuer, pledged the shares it holds in Pingtan Development and the fruits thereof (including bonus shares, transferred shares, and cash dividends) to the bond trustee to guarantee to convertible bond holders the convertibility of bonds and payment of the principal and interest. The bond holders are free to opt for a conversion of the bonds or not.

Huatai United Securities Co., Ltd., being a large-size securities broker and the earliest researcher in convertible bonds, has assisted controlling shareholders of multiple public companies in the issuance of convertible bonds. It has strong professional teams and underwriting resources.

Capital markets attorneys Qi Wei and Chen Wei advised Shantian Forestry on the issuance. Their efficiency and expertise were recognized by both the client and the underwriter.