Tue 06/16/2020 03:36 AM
Potential strategic investor of Reward Science, a Beijing municipal-government owned enterprise, had recently finished its due diligence, according to an offshore source briefed by the administrator and another onshore buyside source.

The administrator is negotiating the terms and pricing with the potential investors and an announcement is expected at the end of June. Proceeds from the investment will be ring fenced and go towards all creditors on a pari passu basis, according to one of the sources.

A new restructuring plan will be released by July and will constitute some changes to the original plan, according to a third source familiar with the situation.

Beijing Weiheng Law Firm, the administrator of Reward Science and Technology Industry Group’s bankruptcy proceeding in China, previously proposed a draft restructuring plan which is likely to see full recovery for creditors with a proposed 25% upfront payment and full repayment within 2.5 years depending on asset disposal progress, as reported.

On April 13, Beijing Chaoyang District People’s Court approved the petition by Reward Homecare Chemical (Jiangsu) to extend the deadline of filing a restructuring plan until the coronavirus outbreak is “under effective control”.

The restructuring of Reward Homecare Chemical (Jiangsu) also requires coordinated efforts in recruiting investors and reaching investment agreements as the case has been consolidated with Reward Science and Technology Industry Group, Beijing Shuangwa Dairy and Beijing Reward Homecare Chemical, the company added.

As reported, Beijing Weiheng Law Firm took the significant step of rejecting onshore bondholders’ claims totalling RMB 2 billion to a pledge over part of the property. The administrator argued that the two onshore bonds, “15 Reward 01” and “16 Reward 01”, were unsecured debt and the relevant security agreement was unlawfully entered between lead underwriter Zheshuan Securities and the company.

In addition, the administrator has recognised the debt claims of Reward’s defaulted $200 million 7.25% guaranteed unsecured senior notes due Jan. 25, 2020 ahead of the company’s first creditors’ meeting in December 2019.

Reward Science also obtained the recognition of the Chinese proceeding as a foreign main proceeding under Chapter 15 of the US Bankruptcy Code in October 2019, despite the objection of some offshore noteholders, including Pinpoint and Value Partners, who said they were concerned that they would not be afforded fair and equal treatment in the domestic proceeding, as reported by Reorg.

--Simon Lee, Katherine Shi
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