Defaulted Chinese conglomerate Macrolink Holding had restarted its talks with Sichuan Development Holding, a state-owned enterprise (SOE) directly supervised by the State-Owned Assets Supervision and Administration Commission of Sichuan Province, for a potential transfer of partial shares in listco Macrolink Culturaltainment, one company source and a source briefed by the company told Reorg.
Sources said the plan was for Sichuan Development to step in and buy back more than 30% of the shares in the listco, making it the largest shareholder of Macrolink Culturaltainment.
One source noted that the due diligence process had been finished by the end of last year but the plan was postponed as Mr. Wang Fengchao, former Chairman of Board of Sichuan Development, was promoted to be the deputy governor of Sichuan Province, leaving the chairman position open to competitions.
As
reported, Sichuan Development has an established relationship with Macrolink. In October 2019. Mr. Fu Jun, chairman of Macrolink Holding’s board, announced a plan to invest over RMB 20 billion ($2.87 billion) in Sichuan province, and to specifically partner with Sichuan Development in building a hot spring resort in the province, according to China media
reports.
Macrolink Holding effectively defaulted on its due March 6 payment of principal and interest on its RMB 1 billion 6.98% “15 Macrolink MTN001” bonds and triggered a cross default for 19 Macrolink SCP002, an RMB 1.01 billion 7.8% 270-day SCP maturing April 21 and 19 Macrolink SCP003, an RMB 350 million 9% 270-day SCP maturing May 5, according to an
announcement on March 10.
Fourteen holdout investors, representing 76% of the principal amount in the defaulted “15 Macrolink MTN 001” have voted against Macrolink Holding’s resolution to defer the principal and coupon under the notes for one year during a March 18 bondholder meeting, according to a
company filing with the Shanghai clearing house.
Listco
Bondholders of the listco’s RMB 1.3 billion 7.5% corporate bond “15 Hualian” have voted to pass the company’s six-month put option extension proposal, according to a company
announcement to the Shenzhen Stock Exchange on March 26. Around 84.5% of the bondholders had voted to pass the approval, the announcement said.
As
reported, Macrolink said it plans to 1) first repay all the principal and interest under puts exercised by retail investors, as well as the principal amount of puts that are below RMB 3 million exercised by institutional investors, then repay the other large institutional investors on their first 5% of the principal of the puts, and lastly, pay this year’s coupon totaling RMB 97.5 million to all investors.
The interest rate will be adjusted to 8.5%, starting April 1, the company added. Macrolink Culturaltainment also agreed to pledge its indirectly owned 140 million shares in Bank of Changsha as a guarantee of “15 Hualian” until all principal and coupon payments are completed.
As
reported, Macrolink was also in talks with Huarong Asset Management for the latter to step in and purchase the creditor’ rights, and the plan is for Huarong to help pay down the debts due under “15 Hualian”, while the exchange will issue new bonds for Huarong which will be later converted into creditors’ rights.
--Katherine Shi