Sun 08/09/2020 19:57 PM
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From Asia Core Credit’s Managing Editors
In this column, Asia Core Credit managing editors Stephen Aldred and Shasha Dai take turns writing about trends in high yield, distressed debt, distressed restructuring and bankruptcy in major Asian markets including China, Southeast Asia, India and Australia. For questions or comments, please contact Stephen at and Shasha at, and please send your people and fund news to For access to all high yield, distressed debt, distressed restructuring and bankruptcy situations across APAC, please request access here.

Asia Core Credit Watchlist
Below is a list of companies or credits worth watching that face looming maturities, upcoming court proceedings or creditor campaigns. For questions or comments, please email us at

From airlines to cruise lines and gyms, Covid-19 lockdowns and social distancing restrictions have flattened companies and earnings globally. How and when revenues will normalize – and what the new normal will be post-Covid - is a critical question for lenders as they negotiate with business owners on covenants waivers, amendments to terms and debt extensions.

In the case of private equity-owned businesses, the reflex first ask from bank syndicates is often an equity injection. Sponsors’ natural inclination is to withhold the option. That may not be best for long-term relationships with their lender base in Asia.

While debt options for private equity buyouts in Asia have broadened in recent years, LBO loans in the region often are still funded by commercial banks, who place a high premium on relationships – and have a history of placing sponsors on “no lend” lists for extended periods for defaulting on loan obligations.

KKR, as reported, is finalising a return as majority owner of MMI Holdings in Singapore - an asset it first acquired through an LBO in 2007. The surprise outcome follows a prolonged negotiation, but also some heated altercations, particularly with Taiwanese banks, who threatened at one point to boycott all KKR loans going forward. While KKR could function in Asia without Taiwanese support, ensuring available liquidity for deals - and reducing tensions on existing assets - is also doubtless a consideration for the firm.

FountainVest Partners and Ontario Teachers’ Pension Plan (OTPP), sponsors of Hong Kong-headquartered upscale fitness chain Pure Group, took the option to inject around $26 million equity into the asset, which like all gyms has faced repeat lockdowns and taken a hit on earnings, as Reorg reported this week.

As sources told Reorg, the equity injection effectively signalled to lenders – a small club of international and regional banks – that FountainVest and OTPP were doubling down on their investment, and that commitment made banks comfortable to sign off on effectively two years of covenants relief. The negotiated package even keeps the option on the table for sponsors to make additional acquisitions, or open new facilities to expand the business.

Contrast that with Bain Capital’s current position on Trans Maldivian Airways where negotiations have stalled over lack of an equity injection, an amortization payment has been missed, and lenders and owners of the business are now on a standstill agreement – and initial support for Bain from its relationship banks has dwindled as negotiations drag, according to sources.

Trans Maldivian has a cash burn rate of $3 million per month with its fleet of seaplanes currently grounded. A 12-month equity injection of $36 million would smooth ruffled feathers and salvage relationships on an asset that, when owned by Blackstone, paid out two dividend recaps in two years, in the process allowing Blackstone to recoup all its equity, as reported.

Asia now represents a quarter of global private equity assets under management, up from a mere 10% in 2010, according to Bain & Co’s Asia-Pacific Private Equity Report 2020. While deal value fell 16% from historic highs in 2017 and 2018 to $150 billion in 2019, it was still 9% higher than the average annual $137 billion in the prior five years, the same report notes.

As with all things Covid-19, there is no best guess for what deal volume will be this year, but with dry powder in the region at a record $388 billion - 33% of which is targeted to buyout and growth investments - there is pressure to invest. And, as Bain’s report notes, 85% of PE funds say rivalry for the best deals has increased, with rival GPs considered the biggest competitive threat, followed by corporate investors and LPs investing directly.

As with the Global Financial Crisis (GFC) in 2008/2009, the first completed buyout deals to emerge post-Covid are expected to be for known and favoured sponsors.

A case in point is Baring Private Equity Asia (BPEA) and its planned buyout of Hexaware Technologies Ltd. in India. BPEA is a known sponsor among lenders, commercial banks have previously been lenders to Hexaware, and in a market with few “safe” lending opportunities available, a $380 million loan to refinance the company’s $385 million due 2021 bonds has already attracted 12 banks before even going to general syndication, as reported. The debt could be expanded to $600 million to back Bain’s privatisation play.

As Asian private equity has grown, firms operating in the region have established wider financing options between unitranches, U.S., European and Australian TLBs, and high-yield bonds, against the still more common commercial bank syndicated loans. In recent years, sponsors have even taken to playing off bank syndicates against alternative financing options, to maximise leverage, loosen covenants, and cut pricing on buyout debt.

Coming out of Covid-19 though, and based on post-GFC experience, available leverage will be reduced, covenants will tighten, and pricing will increase. For commercial bank debt, relationships will be more in play, and could be key to winning a deal.

--Stephen Aldred, Managing Editor - Asia


Bluewaters Power

In just over a week West Australian coal fired power generator Bluewaters Power saw 14 of 15 lenders to its A$384 million ($277.4 million) syndicated loan exit the facility at prices ranging from the low to high 70s. The trades took Bluewaters’ sponsors Sumitomo Corp and Kansai Electric by surprise as the loans moved from predominantly Australian and European commercial banks to hedge funds Oaktree Capital Management, Elliott Advisors, Davidson Kempner and, following a fourteenth rapid trade at the close of last week, SSG Capital.

Read Reorg’s coverage of Bluewaters HERE.

Virgin Australia

Broad Peak and Tor have sent a seven-page summary of an alternative Deed of Company Arrangement (DOCA) to unsecured bondholders of Virgin Australia Holdings, seeking their support to consider joining them, and noting that conditionalities in the documents hinge around obtaining access to key stakeholders to complete certain limited diligence, which they note the administrators have not agreed to provide access to at this time. The two hedge funds state that they have capacity to underwrite an A$800 million convertible note for funding support, and that recovery to participating noteholders would be 50-67 cents on the dollar.

Read Reorg’s coverage of Virgin Australia HERE.


Haidian SAIG

Beijing Haidian State-Owned Assets Operation & Management Center (Haidian SAOMC), parent company of Beijing Haidian State-Owned Assets Investment Group (Haidian SAIG) held an investor call on July 28 to deny market rumor that the chairman of Haidian SAIG has “fled” after allegedly committing wrongdoing. The rumor triggered its onshore bonds to drop 25 points from near-par to around 76 in the past week.

Read Reorg’s coverage of Haidian SAIG HERE.

Huachen Energy / Wintime Energy

Some holders of Huachen’s defaulted $500 million 6.625% senior notes due May 18 have pushed back on the proposed 20% principal haircut in the company’s five-year term-out plan, although most noteholders are unwilling to risk being dragged into the onshore court-supervised restructuring of parent company Wintime Energy. As reported, Huachen proposed a five-year term-out plan to noteholders, which consists of a 20% haircut on principal, significant reduction of coupon to a nominal rate and a partial repayment of around 30% of the remaining principal in the second year using proceeds from the disposal of non-core assets, with NPV said to be around 60.

Read Reorg’s coverage of Wintime Energy / Huachen HERE.

Shandong Ruyi Technology Group

Chinese textile company Shandong Ruyi Technology Group has remitted funds offshore to make a belated $10.425 million coupon payment under its $300 million 6.95% notes due July 5, 2022 before a 30-day grace period ends today (Aug. 5).

Read Reorg’s coverage of Shandong Ruyi HERE.

Tahoe Group

Tahoe Group has promised some holders of its RMB 1.5 billion ($211.9 million) 7.5% medium term notes due July 5 (“17 Tahoe MTN001”) in a series of individual meetings that it will full repay the defaulted onshore notes in installments and will not request for bondholders to take a haircut.

Read Reorg’s coverage of Tahoe HERE.

Tewoo Group

Chinese state-owned commodity trading firm Tewoo Group has entered a government-orchestrated in-court bankruptcy process after the PRC court accepted bankruptcy reorganization of the Tianjin SOE, confirming Reorg’s report. Buyside sources expect the recovery rate to be around 20% to 30%.

Read Reorg’s coverage of Tewoo HERE.

Tsinghua Unigroup

Tsinghua Unigroup’s new investor, Chongqing Liangjiang New Area Development, is conducting due diligence on the technology conglomerate, with the goal of completing the equity transaction by the end of this year. The uncertainty of who will control Tsinghua Unigroup upon close has led to a proposed $900 million syndicated loan, to be arranged by Credit Suisse, being put on hold due to complications related to change of control.

Read Reorg’s coverage of Tsinghua Unigroup HERE.

Yuhuang Chemical

Unsecured creditors of Shandong Yuhuang Chemical Group have pushed back on an out-of-court restructuring plan led by the defaulted chemical company’s home city government partly because it only offers a recovery rate of around 10%. The pushback has made a court-supervised bankruptcy restructuring the most viable option although the Heze municipal government is still exploring other possibilities before officially pushing the company into court.

Read Reorg’s coverage of Yuhuang Chemical HERE.


Hexaware Technologies

Twelve banks have joined the $380 million five-year syndicated term loan to refinance Baring Private Equity-backed Hexaware Technologies’ $385 million 7% notes due July 14, 2021. The banks are ANZ, Bank Sinopec, Barclays, BNP Paribas, Citi, Credit Agricole CIB, DBS Bank, Deutsche Bank, E. Sun Commercial Bank, HSBC and Sumitomo Mitsui Banking Corp, as mandated lead arrangers and bookrunners. The loan pays pricing in the mid-400bps over LIBOR and opening net leverage is 4.3x.

Read Reorg’s coverage of Hexaware HERE.

Kesoram Industries

Kesoram Industries Ltd. is in talks with several private equity investors and hedge funds, including Farallon Capital, to raise money under the company’s recently approved a INR 20 billion ($266.71 million) fundraising plan and refinance its debt. The talks are at an initial stage and the type of instrument, size, tenor and rate of return are yet to be finalized.

Read Reorg’s coverage of Kesoram Industries HERE.


Alam Sutera Realty Tbk

Indonesian real estate company PT Alam Sutera Realty Tbk (ASRI) is looking for solutions to refinance its outstanding $115 million 11.5% notes due April 2021 and $370 million 6.525% notes due April 2021, including a latest proposed issuance of up to $485 million Reg S secured notes with a maturity, at the earliest, in 2024.

Read Reorg’s coverage of Alam Sutera Realty HERE.

PT Modernland Realty Tbk

Legal advisors are circling holders of Indonesian real estate developer PT Modernland Realty Tbk’s (MDLN) $150 million 10.75% notes due August 2021 and $240 million 6.95% notes due April 2024 for legal representation ahead of a potential restructuring of the USD notes. A bondholder meeting is scheduled for Aug. 12 to discuss the group’s restructuring process and timetable and to address any queries from bondholders.

Read Reorg’s coverage of MDLN HERE.

From Our Financial & Legal Analysts
Below are links to reports written this week by our financial and legal analysts.

Fundraising and People Move News
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Credit Suisse Founder Securities, Credit Suisse’s China joint venture, has appointed Tim Tu as CEO, while current CEO Minsheng Wang was appointed vice chairman of the firm, Credit Suisse said in a July 16 press release. Daniel Qiu will take on the newly created role as head of investment banking & capital markets for the joint venture. Tu joined Credit Suisse in 2016 from Standard Chartered Bank, where he was head of structuring Greater China in the bank's Asia Pacific Financing Group responsible for originating and structuring of financing. Qiu will drive the JV’s underwriting and advisory business in China, working with Credit Suisse’s Greater China and regional investment banking teams to serve both onshore and international clients.

Allan Wardrop has started a new role with Oaktree Capital Management as a senior vice president on the Distressed Opportunities team in Hong Kong. He was previously a partner at Sidley Austin, and before that a partner at Hogan Lovells.

Week Ahead
Below is a list of events on the Reorg Asia Calendar for the next two weeks



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