Annual Report 2009 - Greentown China Holdings Limited

Notes to the Consolidated Financial Statements
For The Year Ended 31 December 2009
28. CONVERTIBLE BONDS (Continued)
(i)
2006 Convertible Bonds (Continued)
(ii) Redemption (Continued)
– Redemption at the option of the bondholders
Holders of the 2006 Convertible Bonds have the right to require the Company to redeem the
convertible bonds at their outstanding principal amount plus accrued interest (including
any default interest) with respect to such 2006 Convertible Bonds as follows:
• to redeem, at the option of such holders, all or a part of the 2006 Convertible Bonds
on 10 January 2009, being the third anniversary of their issue date;
• to redeem in whole, but not in part, the 2006 Convertible Bonds upon the occurrence
of a change of control when (a) any person or persons, acting together, other than
any of the relevant shareholders, namely SONG Weiping, SHOU Bainian and Xia Yibo
(the “Shareholders”), acquires more than 50% of the voting rights of the Company’s
issued share capital or the right to appoint and/or remove all or the majority of
the Company’s directors or (b) the Company consolidate with or merge into or sell
or transfer all or substantially all of its assets to any other person resulting in any
person or persons, acting together, other than any Shareholders, acquiring control
over more than 50% of the voting rights of the Company’s issued share capital or the
right to appoint and/or remove all or the majority of the Company’s directors; and
• to redeem in whole, but not in part, the 2006 Convertible Bonds upon the Company’s
shares ceasing to be listed or admitted to trading on the Stock Exchange subsequent
to the Global Offering.
The net proceeds received from the issue of the convertible bonds have been split between a liability
component and a number of embedded derivatives as follows:
(i)
Liability component represents the present value of the contractually determined stream of future
cash flows discounted at the prevailing market interest rate at that time applicable to instruments
of comparable credit status and providing substantially the same cash flows, on the same terms,
but without the embedded derivatives.
The interest charged for the year is calculated by applying an effective interest rate of
approximately 14% per annum to the liability component since the convertible bonds were issued.
(ii)
Embedded derivatives, comprising:
(a)
(b)
(c)
The fair value of the option of the bondholders to convert the convertible bonds into equity
of the Company at a conversion price linked to the offer price of the Company’s shares in
the Global Offering;
The fair value of the option of the Company to require the bondholders to redeem the
convertible bonds; and
The fair value of the option of the bondholders to require the Company to redeem the
convertible bonds.
Greentown China Holdings Limited Annual Report 2009 157