Sun 05/02/2021 21:00 PM
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The accuracy of Reorg’s sourcing is the basis of its reputation. Honest and accurate sourcing means you can rely on the news and analysis we publish.

My objective in this op-ed is simple: to show some of the vetting process that every Reorg story goes through before publication. Particularly I want to focus on the amount of thought and deliberation that goes into sourcing for any story.

To do that, I need you to imagine for a moment that you are a Reorg journalist. Reliable sources have told you that Chinese regulators are contemplating restructuring or extending the debt of China Huarong International Holdings, the offshore arm of China Huarong Asset Management Co.

It’s a major scoop. You know that if this plan materialises, it could result in haircuts on the company’s $23.104 billion offshore bonds. It is material information that is vital to our readers. You also know that your story, if published, will move the offshore bonds down. You need to publish fast, but first, you need to be sure you are accurate.

If your sources are wrong, Reorg’s reputation will be damaged. And you will likely experience a sudden, dramatic alteration in your career trajectory.

(The above is of course a story we published on April 20. Here’s how Reorg’s source checks work.)

Double sourced

Cross checking information is vital to accuracy, which is why we insist on double sourcing for virtually all Reorg stories (see the end of this article for an example exception). What we publish can materially move market prices. And we are well aware that there is a benefit to sources planting news to move a bond or stock price.

As a Reorg journalist, you know all this, and you know that every story must be double sourced.

You also know we distinguish between sources close to a situation and sources familiar. Broadly, sources close have direct knowledge or are directly involved. Sources familiar are reliable sources with knowledge from parties directly involved, or who have seen documents. A source from the same institution as your first source does not qualify as a second source. And a source refusing to confirm or deny cannot be used as a source on any story. Finally, your sources cannot have gained their information from the same original source.

Got that?

You will have to run your story past either Shasha Dai – a veteran of Dow Jones/The Wall Street Journal – or myself, a 20-year news veteran. Potentially you will face questions from both of us.

Questions you may face include: How do your sources know what they know? Have you used this source before? Are your sources manipulating the market for their own advantage? Is there any risk that your sources have shared information to manipulate our reporting? Are your sources speaking to the same source?

You should also know that our policy means we will often hold a story for further detail, or sourcing. You may have to go back and get more details. Holding can be for a few minutes, or it can be for days. The idea of holding a story is to go back to sources and verify with further details or deeper sourcing.

On April 15 we reported that syndicated lenders to PT Sri Rejeki Isman Tbk (Sritex)’s $350 term loans had decided at a meeting to insist the company remain current on interest. We did not report that the lenders had decided to accelerate the loan. We held for confirmation amid conflicting reports, and filed an accurate story from reliable sources.

Our story was accurate.


We do not bury corrections.

Our reputation hinges on the accuracy of our sourcing, but equally relies on our honesty in reporting. If we are wrong, we issue an open correction.

We do not bury the correction in an update or subsequent story.

(By the way, we are also aware of the value of prior knowledge of a correction being issued).


Reorg published its story on Chinese regulators considering restructuring or extending the debt of China Huarong International Holdings on April 20. The offshore bonds moved down 7-10 points on Reorg’s news, which was also picked up by Bloomberg and Financial Times. The story was held back for a few days before publication, to verify, and provide detail on the thinking behind the potential move. It clearly outlines that this is one among a number of options under consideration. The story is HERE. No correction has been issued.

Reorg published a single sourced story that deal has been agreed to sell semiconductor maker UTAC to a Chinese buyer on Jan. 15, 2020. Bonds moved up around 3 points on the news. The story was held for 7 days before publication. The story was unmatched by other news organisations. The company confirmed Reorg’s story on Jan. 23, 2020. No correction was ever issued.

--Stephen Aldred, Managing Editor - Asia

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


Greensill Capital Pty Ltd.

At the second creditors meeting of Greensill Capital Pty Ltd. on April 22 creditors voted to place the company into liquidation. Grant Thornton have been appointed joint and several liquidators of the company and representatives on behalf of Softbank Vision Fund, Credit Suisse and the Association of German Banks, among others, were appointed to the committee of inspection.

See Reorg’s coverage of Greensill Capital Pty Ltd. HERE.

Freedom Foods Group Ltd.

Freedom Foods Group Ltd. will hold an EGM on May 25 to seek approvals for parts of a recapitalisation involving the upto A$265 million ($206 million) six-year subordinated secured convertible notes which have have pay-in-kind (PIK) interest of 8.5% for the first 30 months, then have a cash/PIK pay structure of 5% cash and 3.5% PIK until the maturity date.

See Reorg’s coverage of Freedom Foods Group Ltd. HERE.


Sichuan Languang Development

Sichuan Languang Development is in talks with potential strategic investors including state-owned enterprise backed by Sichuan State-owned Assets Supervision and Administration Commission to introduce the candidate as a strategic investor into the company, according to three sources familiar with the matter. One of the potential strategic investors that remains in talks with the company is Sichuan Development, which initiated the talks with the company last year, said the first two sources.

See Reorg’s coverage of Sichuan Languang HERE.

eHi Car Services

eHi Car Services reported a total revenue of RMB 6.171 billion for 2020, up from RMB 5.722 billion in 2019, representing a 7.9% year-over-year growth. It recorded a gross profit of RMB 805 million, down 28.3% from RMB 1.123 billion in 2019, according to an annual report seen by Reorg. Loss for 2020 was RMB 299.6 million, widening a loss of RMB 33.1 million in 2019.

See Reorg’s coverage of eHi HERE.

China Huarong Asset Management Co.

Chinese regulators are contemplating restructuring or extending the debt of China Huarong International Holdings, the offshore arm of China Huarong Asset Management Co., which if materialized, could result in haircuts for the company’s bonds, according to two sources familiar with the matter. The sources added that whether Huarong International’s debt will be restructured is far from determined or finalized, and that regulators are considering other options or scenarios. Regulators will likely ask Chinese banks and other financial institutions to continue supporting Huarong including not to withdraw credit lines so that Huarong will make debt payments as they become due before the restructuring plan is finalized, the sources said.

See Reorg’s coverage of China Huarong HERE.

China Fortune Land Development

A group of China Fortune Land Development’s offshore bondholders led by US-based distress fund Contrarian Capital Management has mandated Latham & Watkins as legal advisor as the group tries to force the defaulted Chinese developer to come to the negotiating table. Meanwhile, CFLD plans to divest commercial real estate projects, mostly located in southern China, that were funded by its second-largest shareholder Ping An Life Insurance to developer Shenzhen Parkland Group for a market-price consideration. The move is seen by bondholders as Ping An not providing additional support to CFLD. The impact is somewhat offset by the fact that CFLD will receive proceeds from the asset divestiture, although the amount or use of the proceeds remain unknown.

See Reorg’s coverage of CFLD HERE.

Yestar Healthcare Holdings

A group of bondholders of Chinese medical consumable company Yestar Healthcare has engaged Houlihan Lokey as financial advisor and Hogan Lovells as legal advisor ahead of upcoming negotiations on the restructuring of its $200 million 6.9% senior notes due Sept. 15, 2021. Hogan Lovells was appointed this afternoon, April 23, after Houlihan Lokey held a beauty parade yesterday to select a legal advisor. Other advisors that have pitched to the group include Latham & Watkins, Kirkland & Ellis and Akin Gump Strauss Hauer & Feld.

See Reorg’s coverage of Yestar HERE.

Chongqing Energy Investment Group

Chongqing Energy Investment Group has set up a cash pool of RMB 1 billion to RMB 2 billion with help from the Chongqing municipal government to repay its maturing onshore debts. The cash pool was set up at the end of March, before an investor call was held on April 8, and can be used to refinance any maturing debts. The company’s management is still in talks with the government to secure more financial support.

See Reorg’s coverage of Chongqing Energy HERE.


Indiabulls Housing Finance

Indiabulls Housing Finance $150 million 4.5% foreign currency convertible bonds due 2026, were indicated down to the low 90s from 107.65, as shares of the non-bank finance company dropped 22.4% during April over concerns of the economic impact due to the recent surge in Covid-19 cases in India. Separately, after an urgent hearing, the Division Bench of the Bombay High Court has passed a detailed order staying all investigations against the company and its officials, regarding allegations of siphoning off funds and accounting irregularities committed by the promoters and directors of the company between 2014 and 2020.

Read Reorg’s coverage of Indiabulls Housing Finance HERE.

Birla Tyres Ltd.

After closing a private financing deal with Goldman Sachs, Cerberus Capital and Edelweiss Group to restructure the debt of Kesoram Industries Ltd., advisors EY India are reaching out to investors with a financing proposal to restructure the INR 10.6 billion ($141 million) debt of unit Birla Tyres Ltd. However, investor response has been lukewarm as the proposed financing includes equity investment and concerns around the company’s ability to generate profit.

Read Reorg’s coverage of Birla Tyres HERE.

Srei Infrastructure Finance

Srei Infrastructure Finance Ltd.’s wholly-owned subsidiary Srei Equipment Finance Ltd. has received an expression of interest (EoIs) for a capital infusion from Cerberus Global Investments B.V, as well as EoIs for a capital infusion of about $250 million from US-based multi-strategy investor Arena Investors LP and Singapore-based global financial services firm Makara Capital Partners, and has engaged with the private equity firms to bring capital into the business.

Read Reorg’s coverage of Srei Infrastructure Finance HERE.

Future Retail Ltd.

The Supreme Court of India stayed previous orders passed by the Delhi High Court on March 22 and March 18, in connection with the enforcement of the emergency arbitration award issued by the Singapore International Arbitration Centre (SIAC) and the ability of the Future Group continuing to take steps to complete the proposed INR 247.13 billion ($3.38 billion) merger with Reliance Industries Ltd. The special leave petition,filed by NV Investment Holdings LLC, will be next heard on May 4.

Read Reorg’s coverage of Future Retail Ltd. HERE.


Sri Rejeki Isman Tbk (Sritex)

PT Sri Rejeki Isman Tbk (Sritex) has sent a letter to the informal steering committee (ISC) representing the lenders to its $350 million syndicated loan facilities, expressing an objection to their choice of Borrelli Walsh as a financial advisor, according to a copy of part of the letter seen by Reorg. Around the same day, April 30, the company sent an email in response to news reports to clarify various matters relating to the PKPU petition filed by CV Prima Karya against the company and three of its subsidiaries, stating that it is not true that the company is behind the origination of the PKPU petition, and it is not true that a director of CV Prima Karya, Djoko Prananto, is a close relative of Sritex’s directors.

Read Reorg’s coverage of Sritex HERE.

Pan Brothers Tbk

Bilateral lenders and syndicated lenders to a $138 million ($133 million outstanding at Sept. 30, 2020) revolving credit facility (RCF) for PT Pan Brothers Tbk held a meeting on April 19, to discuss a proposal for resolution of the company’s debt facilities and to finalise the proposed term sheet. The proposal is structured as a holistic solution to restructuring the company’s debt and discussion focused on areas including security, the extension of the loan facilities and treatment of the company’s existing bonds through a potential exchange offer.

Read Reorg’s coverage of Pan Brothers HERE.

Universal Terminal(s) Pte. Ltd.

A small portion of the S$1.5 billion ($752 million) five-year underwritten term loan, to refinance an existing facility and to fund the transfer of Universal Terminal(s) Pte Ltd. (UT) assets to a special-purpose vehicle, is in syndication to previous lenders. The asset transfers came about due to the acquisition by Jurong Ports of the 41% stake held in UT by the family of Hin Leong Trading (Pte.) Ltd founder OK Lim (now wound up). The valuation of that stake at transfer was S$400-S$500 million ($300-$375 million).

Read Reorg’s coverage of Universal Terminal(s) HERE.

NEW COVERAGE: BIM Land Joint Stock Company

Vietnamese property developer BIM Land Joint Stock Company has priced its debut $200 million 7.375% fixed rate green bonds due May 2026 at 98.47, tight to initial price guidance in the 7.875% area but issued at a discount of 98.47. Books showed 58% of investors were from Asia, 41% from EMEA/EU and 1% from offshore US, according to deal statistics seen by Reorg. The issue priced at a discount, despite entering a market where buysiders noted there was a demand for diversity, due to ongoing concerns surrounding Chinese and Indonesian high yield markets, particularly the volatility generated by ongoing concerns around asset management company China Huarong Asset Management, which had offshore bonds of $23.1 billion as of April 14.

Read Reorg’s coverage of BIM Land HERE.

Fundraising and People Move News
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Akin Gump has added Brian T. Daly as a partner in the firm’s investment management practice in New York, who joined from Schulte Roth & Zabel. The addition strengthens Akin Gump’s capabilities in the U.S. hedge fund market and its ties to the Asian markets, the firm said in a press release. He will help bring together Akin Gump’s funds, corporate/M&A and regulatory teams in Asia and Europe with those in the U.S. Daly’s practice focuses on advising investments funds on legal, compliance and operational programs both in the U.S. and Asian markets.

Ethan Jin has joined Cooley as a partner in the firm’s global capital markets practice and is based in Beijing, the firm said in a release. Jin has significant experience taking companies public on the Hong Kong stock exchange and in Hong Kong public M&A. He was most recently with Wilson Sonsini Goodrich & Rosati.

HSBC Holdings has opened up direct access for ultra-rich clients in Asia to its investment bankers with the establishment of a new institutional family office in Hong Kong and Singapore which offers access to a full slate of financing and investment products, deal-making and institutional market access, according to a Bloomberg report. HSBC is investing $3.5 billion and hiring more than 5,000 new wealth planners to grow its business in Asia over the next three to five years.

Clifford Chance Singapore Managing Partner Kai-Niklas Schneider has been appointed to co-lead the newly formed Singapore Funds Industry Group (SFIG), a partnership between Monetary Authority of Singapore (MAS) and the funds industry to position Singapore as a global funds hub, according to a press release from the law firm.

Together with co-chair Gillian Tan, MAS Assistant Managing Director (Development & International), Kai will bring together senior leaders from across various sub-sectors of the funds industry to contribute their experience and perspectives to identify emerging industry trends, recommend industry standards and lead developmental initiatives, the release states.

Samuel Green has joined Apollo Global Management as a Sydney-based principal, according to his LinkedIn profile. He previously was with Macquarie Principal Finance as a VP.

Blackstone Group in its quarterly earnings call on April 22 said it plans to commence fundraising for its third Asian real estate fund which will be “at least as large” as the prior $7 billion fund, and that it had held a $3 billion first close on its second dedicated Asian private equity fund, which is already larger than its first fund.

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

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