Thu 09/10/2020 02:04 AM
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Linklaters and Houlihan Lokey, the legal and financial advisors to Hilong Holding’s ad hoc noteholder committee, will hold a call at 3 p.m. (HKT) next Monday (Sept. 14) to provide a progress update on the company’s restructuring, according to two sources with knowledge and two sources familiar with the matter. Meanwhile, negotiations with the company have dragged due to disagreement over general economic terms and what assets should be included in a collateral package securing the potential new notes, but the two sides are otherwise still in discussion, three of the sources said.

An Asian special situation fund has also formally joined the ad hoc committee, which consists of Deutsche Bank, Arkkan Capital Management and an Asia-based asset management company, said two of the sources.

Hilong has so far only agreed to include offshore assets - including oil rigs and a pipe-laying vessel - in the collateral package for the potential new notes but it is reluctant to pledge more valuable onshore assets, two of the sources said.

Linklaters said during a call in July that in order to avoid damaging the business of Hilong unnecessarily, the ad hoc committee intended to negotiate with Hilong on a consensual basis using the now expired exchange offer for the $165.1 million 7.25% senior notes due June 22, 2020 as a starting point.

As reported, the exchange offer for the 2020 notes was backed by a personal guarantee provided by controlling shareholder Zhang Jun and a collateral package made up of oilfield equipment and oil rigs held by owned by Hilong Oil Service and Hilong Oil Service & Engineering Ecuador, but buysiders had also noted that the company and Zhang, respectively, also hold onshore properties, including factory premises in Shanghai and an office tower in Beijing that could be pledged to offshore noteholders.

However, Hilong had previously told an investor in June that its onshore assets could not be pledged for borrowings while any asset pledge is also subject to the approval of its clients, as reported.

Company management on Aug. 31 earnings call detailed that it was still in talks with the ad hoc committee’s advisors on the restructuring plan but stopped short of providing an indicative timeline but noted that it does not have any plan to dispose of offshore assets, as reported.

The management added on the call that since defaulting on its $165.1 million notes in June, Hilong’s operation largely remained stable, with no immediate acceleration of loans from any onshore bank lenders.

As reported, Houlihan Lokey and Linklaters had been conducting due diligence since July while a repayment plan was expected to be finalised by the end of this year.

Admiralty Harbour and Sidney Austin are Hilong’s financial and legal advisors, respectively, as reported.

Houlihan Lokey and Linklaters did not respond to a request for comment.

The company’s capital structure is below:
 


                                                                                         (Click HERE to enlarge)

--Shirley Li, Simon Lee
 
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