Thu 09/24/2020 08:00 AM
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Chinese electronics manufacturer Tunghsu Group has hired Ogier as offshore legal advisor for potentially implementing a scheme of arrangement in the British Virgin Islands for its defaulted $342 million 7% senior notes due June 12, while its financial advisor Admiralty Harbour remains in talks with bondholders on a consensual financial restructuring, according to two sources familiar with the matter. Continue reading for the Asia Core Credit by Reorg team's coverage of the Tunghsu Group financial restructuring, and request a trial to follow our coverage of thousands of other financial restructurings.

Ogier’s appointment came as certain bondholders including BFAM Partners, which beneficially owns about 29.2% of the outstanding notes, as well as individual holders Zhang Rui Kang and Le Huan-Hsin, who collectively hold 25.3%, sued the bond issuer, BVI-incorporated Tunghsu Venus Holdings, and guarantor Tunghsu Group in the Supreme Court of New York for failing to redeem the notes, as reported.

Negotiations with bondholders continue, and restructuring terms have yet to be finalized, the sources said. Tunghsu originally planned to extend the note maturity by three years through a scheme of arrangement in the BVI, which requires the consent of 75% of the noteholders by value, but the company could also potentially restructure the notes by simply amending the terms if it could obtain 90% noteholder support, the sources added.

The company’s three-year extension proposal consisted of a 6% upfront cash and partial repayment of 10% and 20% of principal in 2021 and 2022, respectively, as reported.

Tunghsu’s major operating subsidiary, Shenzhen-listed LCD glass substrate manufacturer Tunghsu Optoelectronic Technology reported a 67% year-over-year decline in revenue to RMB 2.77 billion in the first six months of 2020. It swung to an operating loss of RMB 837.3 million and a net loss of RMB 896.8 million for the same period, while total cash balance was down to RMB 9.6 billion as of June 30.

Tunghsu Group had defaulted on a total of RMB 4.742 billion onshore bonds as of end-June, according to Tunghsu Optoelectronic’s interim report.

Below is the capital structure of Tunghsu Group:
Tunghsu Group financial restructuring capital structure from Asia Core Credit by Reorg

 
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