Tue 09/07/2021 06:13 AM
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An ad hoc bondholder group advised by Addleshaw Goddard and Alvarez & Marsal and holding over 25% of Suning Appliance Group’s $600 million 7.5% bonds due Sept. 11, 2021 intends to vote against the company’s proposed consent solicitation which seeks to push out the bond maturity to Sept. 2024 if it goes ahead with the current terms, said a source with knowledge and a source familiar with the matter.

Addleshaw Goddard has been instructed by the group to release a statement in the next few days requesting the Chinese electronics retailer to reschedule the planned bondholder meeting on Sept. 20 and engage with the dissenting bondholders to improve the proposal. The ad hoc group will also request Suning to provide further information so that bondholders can better evaluate the proposed terms, one of the sources said.

In particular, the ad hoc group was disappointed by the lack of discussion between the company and bondholders before the proposal was released as well as insufficient time and information to review the terms and crucially, the company’s ability to honour the proposal.

Suning, which is advised by Linklaters and Admiralty Harbour, has so far told some investors that it has secured the support of about 70% of the bonds, the sources said. The bonds are understood to be predominantly held by Chinese banks and financial institutions, with Addleshaw’s dissenting group consisting of two regional banks and a Chinese financial holding company, according to the sources.

As detailed in Reorg’s analysis, the proposed consent solicitation seeks to extend the maturity of the maturing $600 million bonds from Sept. 11, 2021 to Sept. 11, 2024 with the addition of three $60 million minimum redemption installments occurring on Dec. 31, 2021, Sept. 11, 2022 and 2023. It will also change the frequency of coupon payments from semi-annual to annual and remove Suning.com Co., Ltd as a change-of-control trigger.

Suning had previously told offshore bondholders in a trustee notice on Aug. 26 that the company’s “Joint Facility Committee” would establish a financial creditors committee for the non-listed sector of the group comprising bank and non-bank creditors as well as trustees or facility agents of onshore and offshore bonds and syndicated loans.

According to the trustee notice, Bank of Communications was nominated as the chair of the creditors’ committee. Vice chairs would include:
 
  • China Everbright Bank Co., Ltd
  • Industrial Bank Co., Ltd.
  • China CITIC Bank Co., Ltd.
  • Hua Xia Bank Co., Ltd.
  • Shanghai Pudong Development Bank Co., Ltd.
  • China Merchants Bank Co., Ltd.
  • China Guangfa Bank Co., Ltd.
  • China Minsheng Banking Corporation Limited
  • Evergrowing Bank Co., Ltd.
  • China Zheshang Bank Co., Ltd.
  • Bank of Jiangsu Co., Ltd.
  • Bank of Guangzhou Co., Ltd.
  • Shengjing Bank Co., Ltd.
  • China Resources Bank of Zhuhai Co., Ltd.
  • Minmetals International Trust Co., Ltd.
  • Guotai Junan Securities Co., Ltd.
  • China International Capital Corporation Limited Chairman Huatai Securities Co., Ltd.
  • SPDB AXA Investment Managers Co., Ltd.
  • Shanghai Guotai Junan Securities Asset Management Co., Ltd.
As reported, Suning Appliance is separately also being sued by China Construction Bank (Asia), as facility agent and note trustee, for the repayment of a $165 million facility and $85 million 7% due 2021 notes, as well as by China Shandong Hi-Speed Capital (HK) in relation to $100 million 7.5% senior secured guaranteed notes - both guaranteed by Suning Appliance.

The capital structure of Suning Appliance is below:
 
Suning Appliance Group - Pro Forma as of 08/30/2021
 
12/31/2020
 
EBITDA Multiple
(CNY in Millions)
Amount
US$ Amt.
Maturity
Rate
Book
 
Holdco Level Bank & Other Borrowings
39,001.8
6,000.3
 
 
 
Suning Real Estate Bank & Other Borrowings
29,078.4
4,473.6
 
 
 
Suning.com Bank & Other Borrowings
34,417.1
5,294.9
 
 
 
Total Bank & Other Borrowings
102,497.2
15,768.8
 
19.3x
Suning Appliance ABS
12,628.0
1,942.8
Dec-21-2028
 
 
Suning.com ABS
3,380.0
520.0
Dec-21-2028
7.500%
 
Total ABS
16,008.0
2,462.8
 
22.3x
18 Suning 01 (Suning.com)
-
-
Apr-19-2021
5.200%
 
18 Suning 02 (Suning.com)
-
-
May-09-2021
5.500%
 
18 Suning 03 (Suning.com)
7.1
1.1
Jun-15-2023
5.750%
 
18 Suning 04 (Suning.com)
749.5
115.3
Jul-17-2021
5.700%
 
18 Suning 05 (Suning.com)
923.3
142.0
Aug-13-2021
5.500%
 
18 Suning 06 (Suning.com)
16.3
2.5
Nov-16-2021
4.700%
 
18 Suning 07 (Suning.com)
646.4
99.4
Nov-16-2023
4.900%
 
20 Suning MTN 01 (Suning.com) 1
500.0
76.9
Mar-13-2023
5.000%
 
16 Suning 01 2
-
-
Feb-02-2021
7.300%
 
16 Suning 02 3
2,888.0
444.3
Jun-16-2023
7.300%
 
17 Suning 01 4
1,142.5
175.8
Mar-20-2022
7.300%
 
17 Suning 04 5
360.0
55.4
Jul-14-2022
7.300%
 
17 Suning 03 5
500.0
76.9
Jul-14-2022
7.000%
 
17 Suning 06 5
500.0
76.9
Aug-21-2022
7.300%
 
18 Sudian 01
100.0
15.4
Sep-17-2022
7.500%
 
18 Sudian 03
50.0
7.7
Nov-05-2022
7.300%
 
19 Sudian 01 6
1,800.0
276.9
Jan-29-2023
7.300%
 
19 Sudian 03 6
1,553.0
238.9
May-10-2023
7.300%
 
19 Sudian 05 6
2,213.0
340.5
Jun-28-2023
7.300%
 
20 Sudian 01
1,000.0
153.8
Jun-23-2024
7.000%
 
21 Sudian 01 7
2,854.0
439.1
Feb-02-2023
7.300%
 
Total Onshore Bonds
17,803.1
2,738.9
 
25.6x
$600M USD 7.50% Notes Due 2021
3,900.0
600.0
Sep-11-2021
7.500%
 
Total Offshore Bonds
3,900.0
600.0
 
26.4x
Total Debt
140,208.3
21,570.5
 
26.4x
Less: Cash and Equivalents
(24,757.9)
(3,808.9)
 
Plus: Restricted Cash
17,320.0
2,664.6
 
Net Debt
132,770.4
20,426.2
 
25.0x
Operating Metrics
US$ Amt.
LTM Reported EBITDA
5,317.0
818.0
 
 
Liquidity
Plus: Cash and Equivalents
24,757.9
3,808.9
 
Less: Restricted Cash
(17,320.0)
(2,664.6)
 
Total Liquidity
7,437.9
1,144.3
 
Credit Metrics
Gross Leverage
26.4x
 
Net Leverage
25.0x
 

Notes:
Source: Wind, company filings, Reorg
1. Cross-default, CoC applicable
2. Exchanged to 21 Sudian 01, rest repaid
3. Extended for 2 years
4. Guaranteed by Zhang Jindong
5. Guaranteed by Suning Real Estate, Zhang Jindong
6. Redeemed Put
7. New Notes
US$ Translation: CNY/USD rate used for USD conversion is 6.5.
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