Shandong Ruyi Technology Group Co., Ltd.
Ruyi Engages TTB, Zerobridge as Financial Advisers; SMCP Parent European TopSoho Misses Coupon Payment Under EUR 250M CB Due 2021
Wed 06/24/2020 08:55 AM
Chinese textile company Shandong Ruyi Technology Group has formally engaged TTB Partners and Zerobridge Partners as financial advisors, said two sources with knowledge of the matter.
The appointments are related to Ruyi’s offshore capital structure and came as Ruyi missed a quarterly coupon payment on June 22 under its EUR 250 million 4% convertible bonds due Sept. 21, 2021 issued by European TopSoho Sarl, said the first two sources and a third source.
Shandong Ruyi has already started contacting the convertible bondholders regarding the nonpayment, the first two sources said.
The coupon payment has a five-day grace period according to an offering memorandum (OM) seen by Reorg.
European TopSoho is the parent company of Ruyi’s French apparel subsidiary SMCP with a 53.7% equity stake and is 51.8% indirectly controlled by Shandong Ruyi Technology Group, with the remaining 48.2% being held by Yinchuan Weixin Industry Fund Partnership according to SMCP’s 2019 annual report.
The bonds are convertible into the shares of Paris-listed SMCP at EUR 22.299 each, according to Refinitiv. The shares were at EUR 4.92 at yesterday's close while the CBs were indicated at 54/56 on Refinitiv today (June 24).
The bonds also have a pledge over 31% shares of SMCP’s shares and are guaranteed by Forever Winner International Development, a Hong Kong entity that is wholly owned by Shandong Ruyi, according to the OM.
SMCP announced yesterday that it had contracted a EUR 140 million loan guaranteed by the French State (PGE) up to 90% with a one-year maturity loan and an extension option of up to five additional years while also obtaining a suspension of financial covenants for 2020 from its banking partners.
In return, the company committed to not distributing any dividend for the years 2020 and 2021 according to the release, which sources noted would further tighten its controlling shareholder European Topsoho's liquidity.
Shandong Ruyi is separately facing a $10.425 million semi-annual coupon payment next month under its $300 million 6.95% senior notes due July 5, 2022.
Shandong Ruyi, the ultimate parent of SMCP, earlier on June 15 further deferred a RMB 75 million coupon payment under its RMB 1 billion 7.5% onshore bonds due 2022 for six more months, after already having obtained a three-month extension in March, as reported.
Meanwhile, as reported, the ad hoc bondholder group of Ruyi's US subsidiary Lycra is being advised by Milbank LLP and Moelis. White & Case also represents the company as legal adviser, according to two sources close to the matter. PJT is advising the company as a financial adviser.
Advisers on both sides formally kicked off negotiations last week with an introductory call, according to the same sources.
As reported, Lycra drew $77 million on its RCF in the second quarter and its surety bond issuer had also tightened its terms and required cash collateralization of around $7 million. The RCF contains a springing maximum leverage covenant tested quarterly at the end of the period if leverage is over 5.75x, and Lycra’s current leverage is significantly higher than this level according to Reorg’s analysis.
Shandong Ruyi did not immediately respond to a request for comment. TTB Partners and Zerobridge declined to comment.
The capital structure of Shandong Ruyi is as follows:
(Click HERE to enlarge)
Lycra’s capital structure as of March 31 is below.
-- Stephen Aldred, Simon Lee, Jaishree Kalia
The appointments are related to Ruyi’s offshore capital structure and came as Ruyi missed a quarterly coupon payment on June 22 under its EUR 250 million 4% convertible bonds due Sept. 21, 2021 issued by European TopSoho Sarl, said the first two sources and a third source.
Shandong Ruyi has already started contacting the convertible bondholders regarding the nonpayment, the first two sources said.
The coupon payment has a five-day grace period according to an offering memorandum (OM) seen by Reorg.
European TopSoho is the parent company of Ruyi’s French apparel subsidiary SMCP with a 53.7% equity stake and is 51.8% indirectly controlled by Shandong Ruyi Technology Group, with the remaining 48.2% being held by Yinchuan Weixin Industry Fund Partnership according to SMCP’s 2019 annual report.
The bonds are convertible into the shares of Paris-listed SMCP at EUR 22.299 each, according to Refinitiv. The shares were at EUR 4.92 at yesterday's close while the CBs were indicated at 54/56 on Refinitiv today (June 24).
The bonds also have a pledge over 31% shares of SMCP’s shares and are guaranteed by Forever Winner International Development, a Hong Kong entity that is wholly owned by Shandong Ruyi, according to the OM.
SMCP announced yesterday that it had contracted a EUR 140 million loan guaranteed by the French State (PGE) up to 90% with a one-year maturity loan and an extension option of up to five additional years while also obtaining a suspension of financial covenants for 2020 from its banking partners.
In return, the company committed to not distributing any dividend for the years 2020 and 2021 according to the release, which sources noted would further tighten its controlling shareholder European Topsoho's liquidity.
Shandong Ruyi is separately facing a $10.425 million semi-annual coupon payment next month under its $300 million 6.95% senior notes due July 5, 2022.
Shandong Ruyi, the ultimate parent of SMCP, earlier on June 15 further deferred a RMB 75 million coupon payment under its RMB 1 billion 7.5% onshore bonds due 2022 for six more months, after already having obtained a three-month extension in March, as reported.
Meanwhile, as reported, the ad hoc bondholder group of Ruyi's US subsidiary Lycra is being advised by Milbank LLP and Moelis. White & Case also represents the company as legal adviser, according to two sources close to the matter. PJT is advising the company as a financial adviser.
Advisers on both sides formally kicked off negotiations last week with an introductory call, according to the same sources.
As reported, Lycra drew $77 million on its RCF in the second quarter and its surety bond issuer had also tightened its terms and required cash collateralization of around $7 million. The RCF contains a springing maximum leverage covenant tested quarterly at the end of the period if leverage is over 5.75x, and Lycra’s current leverage is significantly higher than this level according to Reorg’s analysis.
Shandong Ruyi did not immediately respond to a request for comment. TTB Partners and Zerobridge declined to comment.
The capital structure of Shandong Ruyi is as follows:
(Click HERE to enlarge)
Lycra’s capital structure as of March 31 is below.
-- Stephen Aldred, Simon Lee, Jaishree Kalia
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