Finnish international rental giant Cramo said it plans to issue a €50 million (about U.S. $66 million) hybrid bond to strengthen its capital structure and repay existing interest-bearing debt. The coupon rate of the bond is 12 percent. The bond, which was sold to Finnish investors, has no maturity but the company may call the bond after four years.
A hybrid bond is a bond that is subordinated to the company’s other debt obligations and treated as equity in financial statements. As a consequence of the financing arrangement, Cramo’s equity ratio improves by about five percentage points. The final effect of the transaction will be visible in Cramo’s second-quarter interim figures for 2009.