INVESTOR CALL: Fosun International Says It Has Prepared Sufficient Cash to Redeem $379.8M Notes Putable Aug. 17, EUR 384.2M Notes Due Oct. 9; Co. Plans to Dispose of Assets Including Equity Investments

Management of Fosun International said during an investor call Monday, June 20, that the company has prepared sufficient cash for redeeming its outstanding $379.8 million 5.5% notes putable Aug. 17 and outstanding EUR 384.2 million ($404.8 million) 3.3% notes due Oct. 9, according to two source familiar with the matter.

Management pointed to potential asset disposal as means for improving liquidity, citing Fosun’s minority interests in a few listed companies and controlling equity interests in certain non-listed companies. It previously announced a sale of insurance concern Miracle Nova I (US) LLC.

In addition to these potential assets for disposal, Fosun will retain certain core subsidiaries, which will help safeguard the company’s cash flow, management added.

On the financing front, Fosun raised an $870 million syndicated loan this year, the initial target of which is $660 million. Including the syndicated loan and about $300 million bilateral loans, the company has added about $500 million total new loans in the first half of 2022, according to management.

Speaking of recent credit ratings actions against the company, Fosun management said that the loan documents contain no provision that would trigger acceleration of payment resulting from credit ratings changes.

On the debt maturity front, Fosun faces RMB 13.2 billion maturities of public market debt in the second half of 2022. It plans to refinance part of the maturing debt and use its own cash resources to redeem the rest, according to management.

It may also issue short-term commercial papers, negotiate with banks to issue new bonds using loan quotas or use bank credit lines to repay the public market debt, management added.

As for subsidiaries, Shanghai Fosun High Technology (Group) Co. will actively manage the makeup of its bond investors by adding more bank and insurance company holders. Currently, about 40% of the subsidiary’s bonds are held by bank investors.

Its property subsidiary, Shanghai Forte Land Co., has only RMB 4.3 billion outstanding bonds. An earlier asset restructuring of Forte had placed some of its assets into Shanghai Yuyuan Tourist Mart Group, now controlled by Fosun International. Forte can dispose of its old property projects including the Hangzhou project, sell down shares of Yuyuan it owns or use those shares for collateralized financing in order to raise funds for debt repayment, management noted.

Regarding its bank credit lines, Fosun International had over RMB 300 billion credit lines on its consolidated bank statements as of Dec. 31. Its cash balance now remains roughly unchanged from the Dec. 31 level.

The company has about RMB 300 billion listed and unlisted assets, including RMB 100 billion majority-owned assets, RMB 150 billion assets in unlisted companies and RMB 40 billion highly liquid assets.

Fosun International’s offshore notes went up a few points Monday morning after the company’s subsidiaries Wealth Driven Ltd. and Xingtao Assets Ltd. announced tender offers to buy back up to $200 million of the outstanding $379.8 million 5.5% notes due 2023 and up to $200 million of the outstanding EUR 384.2 million 3.3% notes due Oct. 9, 2022, both guaranteed by Fosun.

The notes then declined Monday afternoon with its $500 million 5.05% notes due January 2027 down 5.8 points to 59.2/60.6 and its $400 million 4.35% notes due May 6, 2023, down 7.3 points to 80/82 as some private banks continued to sell, according to two buysiders.

As reported, the company’s offshore notes dropped more than 10 points on Friday, June 17, off of private bank selling, downgrades by Moody’s and short-term maturity concerns.

Below is Fosun International’s capital structure: