Fri 08/21/2020 07:26 AM
UPDATE 1: 7:26 a.m. ET 8/21/2020: The bankruptcy administrator of Chinese state-owned conglomerate Peking University Founder Group has rejected debt claims related to the keepwell-backed bonds issued by Kunzhi Limited and Nuoxi Limited and respectively guaranteed by Founder Information (Hong Kong) and Hong Kong JHC, according to bondholder notices dated Aug. 20 from the bond trustee the Bank of New York Mellon and seen by Reorg.

All outstanding bonds that benefit from a keepwell deed provided by PKU Founder have been rejected by the administrator, according to a source with knowledge and a source familiar with the matter. The issues include:


































Bond Issuer Guarantor/Keepwell Provider
$400M 5.35% 2023 Nuoxi Capital Limited Guarantor: Hongkong JHC Co., Limited

Keepwell: Peking University Founder Group Company Limited
$200M 4.7% 2021 Nuoxi Capital Limited Guarantor: Hongkong JHC Co., Limited

Keepwell: Peking University Founder Group Company Limited
$300M 4.575% 2020 Nuoxi Capital Limited Guarantor: Hongkong JHC Co., Limited

Keepwell: Peking University Founder Group Company Limited
$310M FRN 2021 Kunzhi Limited Guarantor: Founder Information (Hong Kong) Limited

Keepwell: Peking University Founder Group Company Limited
$490M 6.25% 2020 Kunzhi Limited Guarantor: Founder Information (Hong Kong) Limited

Keepwell: Peking University Founder Group Company Limited


As reported, claims under these bonds were previously still pending recognition in PKU Founder’s onshore bankruptcy proceedings as the related debt claims may require “a valid judgment or arbitral award” confirming the company’s liability under the keepwells before the administrator can make its final determination.

According to the notices, the administrator has on Aug. 19 issued a notice of confirmation to the trustee stating that debt claims previously submitted have NOT been recognised by the administrator.

“The trustee is entitled to object to the administrator’s decision within 15 days of the date of the decision (being 19 August 2020) by initiating proceedings with the court, in accordance with Article 58 of the Enterprise Bankruptcy Law of the People’s Republic of China and Article 8 of Provisions (III) of the Supreme People’s Court on Several Issues concerning the Application of the Enterprise Bankruptcy Law,” the notice states.

BNY Mellon said in the notices that any objection is recommended to be filed by Sept. 3 and if bondholders wish the trustee to do so, they are requested to contact the trustee “as a matter of urgency” to give the instruction, arrange indemnification and pre-funding and explain the legal rationale for the objections.

The trustee further noted that it does not intend to object to the decision unless it is instructed and indemnified to do so, adding that instructions should be submitted to the trustee via their custodian by no later than 12:00 noon (London time) on Aug. 28.

Meanwhile, BNY Mellon also recently sent a separate notice and requested holders of the $350 million 8.45% due July 14, 2020, which are issued by Dawn Victor and guaranteed by Founder Information (Hong Kong) and Peking University Resources Group, to declare their bondholding positions, as reported.

As reported, four PKU Founder subsidiaries including Peking University Resources Group, Founder Industry Holdings, PKU Healthcare Industry Group and Peking University Founder Information Industry Group were consolidated into PKU Founder’s ongoing bankruptcy restructuring proceedings.

See Reorg’s legal analysis on PKU Founder’s keepwell bonds HERE.

PKU Founder’s corporate structure with issuers of the offshore senior notes is as follows:

 
(Click HERE to enlarge)

The capital structure of PKU Founder is detailed below:


(Click HERE to enlarge)

--Simon Lee

 




Original Story 5:26 a.m. UTC on Aug. 21, 2020

BREAKING: PKU Founder’s Administrator Rejects Claims Arising From Keepwell-backed Bonds Guaranteed by Founder Information

The bankruptcy administrator of Peking University Founder Group has decided not to recognise claims in respect of the $490 million 6.25% guaranteed bonds due Oct. 17, 2020 issued by Kunzhi Limited and guaranteed by Founder Information (Hong Kong) with a keepwell from PKU Founder, according to a notice to bondholders from bond trustee BNY Mellon dated Aug. 20 and seen by Reorg.

More to follow…
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