SGX says 'death spiral' bonds need shareholders’ approval

SINGAPORE (June 21): A company that wants to issue so-called “death spiral” convertible bonds have to obtain shareholders’ approval if these bonds can be converted at a discount of more than 10% to its price or the new shares exceeds 20% of issued shares, Singapore Exchange says.

The regulator was responding to The Edge Singapore’s queries on regulatory safeguards for shareholders of companies issuing these massively dilutive redeemable convertible bonds.

SGX says that when the “floating” conversion price of such bonds exceeds a 10% discount to the shares’ market price or if they result in the issuance of new shares exceeding 20% of the company’s issued shares, it “must issue a circular to shareholders and get their approval for the issuance”.

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