Tue 11/08/2022 08:28 AM
Share this article:
Alvarez & Marsal and Latham & Watkins, advisors to an ad hoc committee, or AHC, of China Fortune Land Development Co.’s offshore public bondholders said during a call today, Nov. 8, that they have instructed the trustee to prepare documents to file a petition to wind up the issuer and/or the guarantor as a statutory demand expires this Thursday, Nov. 10, according to two sources familiar with the matter.

The advisors said on the call that bondholders signing up for the RSA does not prevent the trustee from pursuing a winding-up action, adding that unless and until there is a formal legal process such as a consent process or a scheme process that has been launched and supported by the requisite percentage of the bondholders, there is no effect on the bondholders’ right to demand repayment or their rights to pursue a winding-up action against the issuer and/or guarantor.

The AHC has demanded that due diligence be carried out on assets expected to be sold, the advisors said on the call, adding that the company has not allowed Alvarez & Marsal or Latham & Watkins to carry out any due diligence, despite the fact that both parties had signed NDAs. The advisors said the AHC remains most focused on the asset sale plan, including the timing, proceeds that could come from the sale, processes in which the assets are being sold and counter parties. However, the advisors said there has been no visibility in this process, as there has been no meaningful engagement from the company after over a year of efforts to work consensually.

The AHC added that it plans to continue negotiating with the company on behalf of all bondholders to get a legally enforceable deal which would commit the company to pay a catch-up fee that has already been paid to onshore creditors. The committee added that the plan should also include a milestone payment and a legally payable annual cash coupon.

Under the current RSA, the advisors said on the call, the deal is designed to have zero payment for eight years, with the potential of there being no payment, be it coupon or milestone payments, for the period of time. There are also no legally binding payments included in the RSA, with much dependent upon the company’s best efforts, advisors said during the call.

As reported, AHC members had instructed the trustee, the Bank of New York Mellon, to issue a statutory demand against both the issuer, CFLD (Cayman) Investment Ltd., and the guarantor, China Fortune Land Development Holdings Co. Ltd.

In a separate announcement to the Shanghai Stock Exchange today, CFLD disclosed that holders representing over 50% of the roughly $4.96 billion total principal amount of offshore notes have signed the RSA. Of those, holders representing over $1 billion principal amount have opted to have part of their debt claims swapped for equity interests, according to the announcement.

CFLD said it has decided to go through an English scheme of arrangement for its offshore debt restructuring. If the restructuring plan is approved by the U.K. court, the plan will be binding to all the USD note holders. The company said it will initiate the U.K. proceedings as soon as possible, and will go through the necessary approval process before the debt-to-equity swaps are implemented, the announcement shows.

As of Oct. 31, CFLD had signed onshore debt restructuring agreements with creditors of a cumulative RMB 126.222 billion financial debt claims and has reduced or waived a total of RMB 11.35 billion debt, interest and penalty, the same announcement shows.

CFLD's capital structure is as follows:
 
China Fortune Land Development - Pro Forma as of 09/08/2022
 
06/30/2022
 
EBITDA Multiple
(CNY in Millions)
Amount
US$ Amt.
Maturity
Rate
Book
 
Secured and Mortgaged Borrowings - Current
20,409.5
2,940.9
 
 
 
Guarantee Borrowings - Current
19,853.3
2,860.7
 
 
 
Secured and Mortgaged Borrowings - Non-current
29,882.8
4,305.9
 
 
 
Guarantee Borrowings - Non-current
52,837.0
7,613.4
 
 
 
Total Bank and Other Loans
122,982.6
17,720.8
 
NM
Lease
214.2
30.9
 
 
 
Total Lease
214.2
30.9
 
NM
19 Wenjin A2
274.4
39.5
Jun-25-2021
6.200%
 
19 Wenjin A3
273.7
39.4
Jun-25-2022
6.800%
 
19 Wenjin A4
273.2
39.4
Jun-25-2023
7.000%
 
19 Wenjin A5
272.9
39.3
Jun-25-2024
7.200%
 
19 Wenjin A6
272.7
39.3
Jun-25-2025
7.300%
 
19 Wenjin Sub Note
260.0
37.5
Jun-25-2025
 
 
19 Jiutong 01
1,972.9
284.3
Oct-31-2024
 
 
19 Jiutong 03
992.3
143.0
Dec-06-2024
 
 
17 Huaxia PPP A4
500.0
72.0
Jun-30-2021
6.600%
 
17 Huaxia PPP A5
500.0
72.0
Jun-30-2022
6.600%
 
17 Huaxia PPP A6
499.5
72.0
Jun-30-2023
6.600%
 
17 Huaxia PPP Sub Note
200.0
28.8
Jun-30-2023
 
 
17 Jiutong A4
107.0
15.4
Apr-21-2022
5.800%
 
17 Jiutong A5
119.5
17.2
Jul-22-2022
6.200%
 
17 Jiutong A6
132.8
19.1
Jul-22-2022
6.800%
 
17 Jiutong Sub Note
36.0
5.2
Apr-23-2023
 
 
20 Deqing A1
241.1
34.7
Mar-19-2021
 
 
20 Deqing A2
311.8
44.9
Mar-21-2023
6.200%
 
20 Deqing A3
302.7
43.6
Mar-20-2023
6.300%
 
20 Deqing A4
302.6
43.6
Mar-19-2024
6.800%
 
20 Deqing A5
302.5
43.6
Mar-19-2025
6.900%
 
20 Deqing Sub Note
270.0
38.9
Mar-19-2025
 
 
Total Onshore ABS
8,417.6
1,212.9
 
NM
17 Jiutong 01 PPN
983.9
141.8
Aug-17-2021
6.200%
 
17 Jiutong 03 PPN
598.2
86.2
Oct-27-2022
6.400%
 
18 Jiutong 01
1,079.4
155.5
Mar-12-2023
6.950%
 
18 Jiutong 02
1,371.5
197.6
Jun-01-2021
5.900%
 
18 Jiutong 03
892.7
128.6
Jun-11-2021
5.900%
 
19 Jiutong 01
2,006.6
289.1
Oct-31-2024
6.400%
 
19 Jiutong 03
979.0
141.1
Dec-06-2024
6.400%
 
15 Huaxia Note 05
3,646.6
525.4
Oct-22-2022
5.500%
 
16 Huaxia Note 01 1
2,745.3
395.6
Mar-09-2021
7.400%
 
16 Huaxia Note 02 1
1,956.9
282.0
Mar-03-2021
7.000%
 
16 Huaxia Note 04 1
2,940.7
423.7
Mar-24-2021
7.400%
 
16 Huaxia Note 05 1
1,958.3
282.2
Apr-18-2021
7.200%
 
16 Huaxia Note 06
3,910.1
563.4
May-12-2021
7.200%
 
16 Huaxia Debt
12.4
1.8
Jan-20-2023
6.600%
 
17 Xingfu MTN 01 2
1,800.0
259.4
May-23-2022
5.800%
 
18 Huaxia Note 01
2,428.3
349.9
May-30-2022
5.000%
 
18 Huaxia Note 02
515.2
74.2
May-30-2023
6.800%
 
18 Huaxia Note 03
1,961.4
282.6
Jun-20-2022
4.400%
 
18 Huaxia Note 04
1,128.4
162.6
Sep-10-2021
5.600%
 
18 Huaxia Note 06
17.5
2.5
Dec-20-2023
6.000%
 
18 Huaxia Note 07
3,926.9
565.8
Dec-20-2025
8.300%
 
19 Huaxia Note 01
999.9
144.1
Mar-25-2024
5.500%
 
20 Xingfu MTN 01 3
1,000.0
144.1
Mar-23-2025
5.500%
 
20 Xingfu MTN 02 3
500.0
72.0
Apr-20-2025
5.170%
 
Total Onshore Bonds
39,359.2
5,671.4
 
NM
$760 Million 8.05% Senior Notes Due 2025
5,274.4
760.0
Jan-13-2025
8.050%
 
$650 Million 8.6% Senior Notes Due 2024
4,511.0
650.0
Apr-08-2024
8.600%
 
$500 Million 6.9% Senior Notes Due 2023
3,470.0
500.0
Jan-13-2023
6.900%
 
$330 Million 8.75% Senior Notes Due 2022
2,290.2
330.0
Sep-28-2022
8.750%
 
$300 Million 6.92% Senior Notes Due 2022
2,082.0
300.0
Jun-16-2022
6.920%
 
$350 Million 7.125% Senior Notes Due 2022
2,429.0
350.0
Apr-08-2022
7.125%
 
$60M 9% Notes Due Dec 2021
416.4
60.0
Dec-27-2021
9.000%
 
$340M 10.875% Notes Due Dec 2021
2,359.6
340.0
Dec-17-2021
10.875%
 
$940 Million 9% Senior Notes Due 2021
6,523.6
940.0
Jul-31-2021
9.000%
 
$200 Million 9% Senior Notes Due 2021
1,388.0
200.0
Jun-21-2021
9.000%
 
$530 Million 8.625% Senior Notes Due 2021 3
3,678.2
530.0
Feb-28-2021
8.625%
 
Total Offshore Corporate Bonds
34,422.4
4,960.0
 
NM
Total Debt
205,396.0
29,596.0
 
NM
Less: Cash and Equivalents
(12,022.0)
(1,732.3)
 
Plus: Restricted Cash
1,634.3
235.5
 
Net Debt
195,008.3
28,099.2
 
NM
Plus: Market Capitalization
11,349.0
1,635.3
 
Enterprise Value
206,357.3
29,734.5
 
NM
Operating Metrics
US$ Amt.
LTM Reorg EBITDA
(18.3)
(2.6)
 
 
Liquidity
Plus: Cash and Equivalents
12,022.0
1,732.3
 
Less: Restricted Cash
(1,634.3)
(235.5)
 
Total Liquidity
10,387.7
1,496.8
 
Credit Metrics
Gross Leverage
NM
 
Net Leverage
NM
 

Notes:
Sources: company filing, Reorg, Cbonds, Shanghai Stock Exchange, Wind, Refinitiv; According to 1H22 interim report, the total overdue short-term loans as of June 30, 2022 amounted to RMB 11.755B; EBITDA calculation does not include the adjustment of capitalised interest as there is no relevant disclosure in 1H22 interim report.; CFLD reported other equity instrument of RMB 5.9B as of June 30, 2022; Onshore bonds issued by CFLD's parent company 华夏幸福基业控股股份公司 CFLD Holdings Co. Ltd., including 18 Huakong 01, 19 Huakong 02, 19 Huakong 03, 19 Huakong 04, 20 Huaxia EB, 20 Hua EB02 and 20 Xingfu 01, were not disclosed in the 1H22 report of CFLD.
1. Rolled over
2. Cross default
3. Redemption default
Pro Forma: For Pro forma, the proceeds from the new bonds were added to cash as the exact use of proceeds for each of the bond raised remains unclear, undrawn credit facilities is adjusted accordingly; the repayment for matured debts were subtracted from cash as the exact source of funding used to repay the debt remains unclear
US$ Translation: CNY/USD rate used for USD conversion is 6.94.
Share this article:
This article is an example of the content you may receive if you subscribe to a product of Reorg Research, Inc. or one of its affiliates (collectively, “Reorg”). The information contained herein should not be construed as legal, investment, accounting or other professional services advice on any subject. Reorg, its affiliates, officers, directors, partners and employees expressly disclaim all liability in respect to actions taken or not taken based on any or all the contents of this publication. Copyright © 2024 Reorg Research, Inc. All rights reserved.
Thank you for signing up
for Reorg on the Record!