Tianqi Lithium reprices convertible bond sale after blunder

Tianqi Lithium Corp. changed the pricing of its 2.6 billion yuan ($375 million) convertible bond after the previous one didn’t comply with Hong Kong stock exchange rules.

The Chinese miner had initially set the price at which the bonds could be converted into stock at HK$49.56 a share, a 10% premium over the price of a concurrent share placement. However, the conversion price was lower than the stock’s five-day average prior to the deal, which isn’t allowed by the bourse.

Following the unusual misstep, Tianqi had to suspend trading of its shares in Hong Kong on Wednesday and renegotiated the pricing of the convertible bond.

In the revised deal, the conversion price was raised to HK$51.85, a 15.1% premium over the placement price of HK$45.05, according to terms seen by Bloomberg News. That’s just above the five-day average of HK$51.84. Banks are also forgoing the 0.5% brokerage fee that would have been paid by investors, the terms show.

A representative for Tianqi declined to comment.

Goldman Sachs Group Inc., HSBC Holdings Plc and Huatai International were the banks arranging the convertible bond sale.

A mistake of this kind is rare in Hong Kong, where the regulator has stepped up warnings to investment banks about filing sloppy applications for initial public offerings as deal activity booms in the city after a long lull.

Companies have been rushing to tap the convertible bond market before the Lunar New Year holiday and earnings blackout, attracted by favorable terms thanks to strong investor demand.

Miners in particular saw a spectacular rally in their shares in January, prompting fundraising by the likes of CMOC Group Ltd. and Zijin Mining Group Co. CMOC rose 16% in Hong Kong last month and Zijin Mining climbed 18%. Tianqi Lithium advanced 12% through Jan. 28 but the shares have tumbled since.  

(By Julia Fioretti and Dave Sebastian)