Mon 07/27/2020 05:32 AM
Chinese state-owned commodity trading firm Tewoo Group is expected to enter a government-orchestrated in-court bankruptcy reorganization process within a few days, according to three sources familiar with the situation.


The court is expected to accept the case “fairly soon” as the Tianjin municipal government is coordinating the situation, according to the sources.


A number of institutional buysiders are now seeking opportunities to buy into Tewoo’s onshore private bonds ahead of the restructuring, according to two buyside sources. The recovery rate is anticipated to be around 20% to 30%, said one of the sources.


Bank of China is among the largest creditors in the Tianjin-based SOE, according to one of the sources, while onshore bank lenders of Tewoo have already formed a creditor committee which is being led by Industrial and Commercial Bank of China.


As reported, Tewoo has been mulling an onshore bankruptcy process since last August to restructure debts totalling RMB 220.895 billion ($31.265 billion) as of Dec. 31, 2018.


The company at that time talked to investment bank China International Capital Corporation (CICC) as well as state-owned “bad” banks Huarong Asset Management and Great Wall Asset Management to explore options, while King & Wood Mallesons was appointed the company’s legal advisor.


Offshore, the company announced in December last year the results of its exchange and tender offer in connection with its $300 million 4.5% bonds due Dec. 16, 2019, $300 million 4.625% bonds due Apr. 6, 2020, $200 million 5.5% bonds due Apr. 6, 2022 and $450 million 5.8% perpetual bonds. The company reported that approximately $27.3 million of its 2019 bonds were validly submitted and accepted for exchange and $253.3 million of the bonds were accepted for tender. After settlement of the tender, approximately $19.4 million of 2019 bonds would remain outstanding, as reported.


But the restructuring process has been stalled after the proposals for reorganizing the SOE were handed from the Tianjin Municipal People’s Government to the central government, as reported.


Tewoo Group is wholly owned and controlled by Tianjin State-owned Assets Supervision and Administration Commission and is one of the 20 largest commodities distribution enterprises in the PRC supported by the Ministry of Commerce, as reported by Reorg.


The legal adviser to the company, King & Wood Mallesons, declined to comment. Tewoo Group could not be reached for comment.

 

 

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--Skylar Chen, Katherine Shi
 
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