Reorg Asia Bi-Weekly
Trust Issues (Feb. 7-22)
Tue 02/22/2022 03:00 AM
From Reorg Asia’s Managing Editors
In this column, managing editors Stephen Aldred and Shasha Dai take turns writing about trends in high yield, distressed debt, restructuring and bankruptcy in major Asian markets including China, Southeast Asia, India and Australia. For questions or comments, contact Stephen at saldred@reorg.com and Shasha at sdai@reorg.com. Send your people and fund news to asiaeditorial@reorg.com.
Current volatility in high-yield bond prices of Chinese real estate developers points to a fundamental trust issue.
That erosion of trust is tied to an erosion of confidence in information sources the market previously used to gauge the truth.
It’s the natural result of a steady stream of previously undisclosed private notes and guarantees. Alongside those are revelations of defective capital structures: an over-abundance of minority interests in subsidiaries, for example, and their potential interplay with default provisions in offshore notes - or their ability to restrict dividend upstreaming to support offshore debt. You can add to that the resignations of auditors, but more fundamental to the problem of trust is companies themselves being economical with the truth.
There are lessons to be learned from each new debacle, but each new debacle teaches the same lesson: don’t trust the information you’re given, whether it’s the company CEO or IR, the news you read, the former insider who now seems blindsided, the company accounts, or even official company statements.
If I’m pointing fingers – and I am – I might say Fantasia started it. Fantasia Holdings on Oct. 4, 2021 defaulted on the outstanding $205.7 million under its originally $500 million 7.375% notes, having previously given guidance and assurance to offshore noteholders that it had prepared sufficient cash to cover the maturity payment, and stating it would transfer the required funds offshore. On top of that, the company had paid off a previously undisclosed $100 million private note in late September, had tapped the offshore market for $750 million in the first half of the year, and had steadily bought back its own notes in the offshore market, while all the while guiding that it had sufficient cash to meet upcoming maturities.
Lesson learned? Don’t trust management assurances.
Logan Group’s $1 billion in previously undisclosed guaranteed debt is no revelation to Reorg reporters, who in June 2021 reported $212 million 7% private placement notes arranged through a chain of transactions among affiliates in March 2021. Sources have also long believed that the company had multiple off-balance-sheet liabilities, but the company’s routine denials reached new levels of absurdity in mid-January when senior management told investors on a project due diligence trip that they were “investigating” whether the rumoured notes were related to subsidiaries.
It has not been disclosed where the mysterious $1 billion in private notes were eventually found. Presumably they were behind Logan’s fridge or under its sofa cushions, which is where lost things usually are found when you’ve exhausted all other avenues of investigation.
Lesson learned? See Fantasia above. (And while I’m on this, is $1 billion the full story, or is there more to come? Asking for a friend.)
Zhenro Properties also seems to have taken a leaf out of the Fantasia playbook. Either that or someone had been drinking diesel oil when the company announced Jan. 4 that it would redeem $200 million 10.25% senior perps.
The company’s subsequent public silence as rumours swirled on Feb. 10 that it didn’t have the funds, and that it had in fact quietly disclosed it would not be able to call the notes, seems to have taught markets that you shouldn’t trust a call notice when a company issues one. Notes plummeted from the mid-90s on Feb. 9, into the 60s, the 50s, the 30s, then the 20s on Feb. 10 and 11, remaining volatile until the company announced on Feb. 18 a consent solicitation for the perps. In that notice Zhenro stated that subsequent to its Jan. 4 announcement, adverse market conditions – which presumably had not caused any problems before Jan. 4 - meant internal funds for debt servicing had become limited…
Following Zhenro’s example, Ronshine won last week’s award for bond volatility executed off the back of a 180-degree turn when its bonds shot up to the low 90s overnight from 70 on guidance that the company may indeed be able to repurchase its bonds.
Ronshine had previously guided widely that it would face a shortfall on repayment of its $500 million due March 1 notes. Despite that galling news, the notes then rose, from around 60 to near 70, and rumours swirled that friends, family and various associates were buying up the bonds. Lo and behold, the company then guided that it may after all be able to meet that bond repayment. The bonds rose overnight from around 70 on Feb. 17 to around 90 on Feb. 18.
It’s an open question whether regulators will investigate any of these events. It’s also debatable whether the current loss of trust will even have an impact on prospects for developers entering the capital markets in three, six, nine, 12 months from now, whenever it is that we get to whatever gets defined as normality.
Rationally, any company that is perceived as having lied about its intentions for repayment, has hidden private debt or is thought to have guided that it could not meet a maturity when it could, or could meet a maturity when it could not, should face not only regulatory investigation, but censure of the markets when it tries to raise new notes.
But will investors continue to have trust issues? Markets don’t really do therapy or 12 Step Healing programs.
At the risk of appearing overly cynical – which I am – it’s possible to see two outcomes, ostensibly binary, but in fact leading to the same outcome.
On the one hand, it’s possible to imagine that investors will look on current events as a one-off, a whirlwind of events driven upon developers by regulators in Beijing. Developers were not really deceitful, they were forced into it. In this scenario, the markets will see a set of Chinese developers chastened by their experience, reformed, restructured, and most importantly, with unencumbered offshore assets and ready to pay 12% for three-year money.
Or, investors will be older, wiser, jaded, and cautious. They will vow never to fall in love with a Chinese real estate developer again. Until they meet the right one, of course. The one with unencumbered offshore assets who is ready to pay 12% for three-year money.
--Stephen Aldred, Managing Editor
From Our Financial & Legal Analysts
Below are links to reports written this week by our financial and legal analysts.
AUSTRALIA
Nickel Mines Ltd.
Nickel Mines Ltd. announced Feb. 18, that it has completed the acquisition of its initial 10% interest in the Oracle Nickel Project which is currently under construction within the Indonesia Morowali Industrial Park in Central Sulawesi, Indonesia. The initial interest was secured via payment of $23 million to collaboration partner Shanghai Decent, which in addition to previously paid deposit amounts totalling $30 million, satisfies the required $53 million for the company to secure a 10% interest in the project, the announcement states.
Read Reorg’s coverage of Nickel Mines HERE.
North Queensland Export Terminal
North Queensland Export Terminal (formerly Adani Abbott Point Terminal), said in an announcement Feb. 16 that it welcomed orders given by the Supreme Court of Queensland on Feb. 15, which ordered respondent users to pay 90% of NXQT’s costs incurred in an original 2020 trial and 95% of NXQT’s costs of its successful appeal. The orders follow NXQT’s successful appeal in August 2021 on the matters of disputed terminal handling charges and alleged unconscionable conduct, as reported.
Read Reorg’s coverage of NXQT HERE.
Basslink Pty Ltd.
Hydro Tasmania announced Feb. 16, that further to its announcement Feb. 10 regarding termination of the Basslink Services Agreement (BSA), Basslink Pty Ltd.’s receivers have declined its offer for an interim arrangement under which key elements of the BSA would be put back in place for one month while parties discussed possible alternative arrangements. Hydro Tasmania said it remains willing to discuss with receivers an alternative commercial arrangement which would provide funding during the receivership and help transition the asset to an alternative commercial model.
Read Reorg’s coverage of Basslink HERE.
CHINA
China Real Estate
China has released a national policy on real estate presale escrow account regulation, which for the first time since the sector’s downturn, promises to allow developers to access funds in the accounts that are in excess of required escrow amount. Property bonds were up following the report.
Read Reorg’s coverage on China Real Estate HERE.
Shimao Group
During a conference call that Shimao management held with investors in a trust loan issued by CITIC Trust, the company proposed a 2.5-year extension of the principal payment. Investors criticized what they considered the company’s prioritizing repaying public bonds over the trust loan. A day earlier, Shimao had proposed repaying RMB 10 million per working day, which was pushed back by investors. CITIC Trust subsequently planned to give Shimao two to three working days to sweeten its proposed terms of extension before the trustee calls a default by the borrower.
Read Reorg’s coverage on Shimao Group HERE.
Ronshine China
This company’s due March notes were up 10 points before trading down four points on Feb. 16 amid rumors that it has bought back some of its own notes. A source close to the company confirmed that it faces an over $200 million funding shortfall for redeeming the due March notes.
Read Reorg’s coverage on Ronshine HERE.
Tus-Holdings
The company’s offshore subsidiary Tuspark Forward has wired sufficient funds to make two interest payments due Feb. 13 under two due 2024 notes.
Read Reorg’s coverage on Tus HERE.
Sunac China
This real estate developer is contemplating returning to the capital market to issue RMB 2 billion medium-term notes in the first quarter of this year, in a potential deal that sources said is a testament to the market’s confidence in Sunac’s financing capabilities and support from banks.
Read Reorg’s coverage on Sunac HERE.
Aoyuan Group
This property developer is in talks with a state-owned enterprise in Shandong province to potentially bring in the latter as a strategic investor. The SOE is conducting due diligence.
Read Reorg’s coverage on Aoyuan HERE.
Yango Group
This real estate company missed the previously-extended 10% principal payment originally due Feb 8 under an RMB 500 million ABN and proposed a further extension.
Read Reorg’s coverage on Yango HERE.
Zhenro Properties
This developer’s bonds and shares plunged on Feb. 11 over concern that it won’t redeem perpetual securities in early March as it has repeatedly said it would.
Read Reorg’s coverage on Zhenro Properties HERE.
INDIA/SOUTH ASIA
Srei Infrastructure Finance
A second forensic audit report conducted from April 1, 2016, to Sept. 30, 2020, by chartered accountant firm Saxena & Saxena, on INR 11.798 billion ($157.3 million) loans disbursed by Srei Infrastructure Finance Ltd. to IL&FS group, has found the loans worth INR 10.798 billion “were not disbursed in the normal course of business,” and alleged round-tripping of funds. Separately, lenders to Srei Infrastructure Finance and its subsidiary Srei Equipment Finance Ltd. are preparing the eligibility criteria for prospective resolution applicants ahead of announcing an invitation to submit expressions of interest (EoIs) shortly.
Read Reorg’s coverage on Srei Infrastructure Finance HERE.
Future Retail
Future Retail’s onshore lenders are as of now still undecided if they want to pursue a restructuring under the Reserve Bank of India’s June 7, 2019, circular relating to the framework of resolution of stressed assets, which was one of the proposals discussed at the Feb. 4 joint lenders meeting (JLM).
Read Reorg’s coverage on Future Retail HERE.
Dharani Sugars & Chemicals
A majority of lenders of Chennai-based Indian sugar company, Dharani Sugars & Chemicals Ltd., are in favour of a promoter-backed INR 3.5 billion ($46.77 million) one time settlement (OTS) plan and are in the process of providing an approval. The lenders have mandated SMC Capital as the financial advisor.
Read Reorg’s coverage on Dharani Sugars & Chemicals HERE.
Indiabulls Housing Finance
Indiabulls Housing Finance Ltd. in an investor presentation posted on Feb. 16, said that the company plans to issue INR 50 billion ($66.3 million) of sustainable bonds in the fiscal year 2022-2023.
Read Reorg’s coverage on Indiabulls Housing Finance HERE.
SOUTHEAST ASIA
Garuda Indonesia (Persero) Tbk
The Indonesian flag carrier looks unlikely to proceed with a U.K. scheme of arrangement, but will instead focus on restructuring its liabilities through its onshore Indonesian in-court supervised restructuring or PKPU. This comes as the clock is already ticking on the PKPU - set to expire in September - and with talks over the potential U.K. scheme seemingly stalled, as the company and its advisors engage in bilateral negotiations with lessors.
Read Reorg’s coverage of Garuda HERE.
PT Sawit Sumbermas Sarana Tbk
Bank Rakyat Indonesia (BRI) is approaching bank lenders for a syndicated loan for the Indonesian palm oil producer, as the company looks to refinance its $300 million 7.75% notes due 2023. Talks for the loan are at an early stage, and the bank did not indicate if it had an actual mandate from SSMS.
Read Reorg’s coverage of Sawit Sumbermas HERE.
PT Kawasan Industri Jababeka Tbk (Jababeka)
The new quorum for the third convening of the Indonesian industrial real estate developer’s AGM on Feb. 23 - following discussions with Indonesia’s Financial Services Authority (OJK) - has been set at 50% of shareholders’ present or represented. Shareholders at the AGM will vote on two resolutions - resolutions eight and nine - relating respectively to the provision of corporate guarantees by the company’s subsidiaries for its proposed $350 million bond issue, and an amendment and restatement of the company’s articles of association.
Read Reorg’s coverage of Jababeka HERE.
Sri Rejeki Isman Tbk (Sritex)
The company announced on Feb. 9 that it had received from the Semarang Commercial Court a cassation notice filed by its lenders Citibank N.A. Indonesia and QNB Indonesia against the company and its three subsidiaries to Indonesia’s Supreme Court on Feb. 2, confirming Reorg’s earlier reporting on the matter. Due to commencement of cassation proceedings, the homologation verdict does not yet have a permanent and final legal enforcement, and provisions stipulated in Sritex’s latest composition plan cannot be executed as yet.
Read Reorg’s coverage of Sritex HERE.
Serba Dinamik Holdings Bhd.
The Malaysian energy services company announced that its wholly-owned subsidiaries, Serba Dinamik Group Bhd. (SDGB) and its indirect wholly-owned subsidiaries, Serba Dinamik Sdn. Bhd. (SDSB), Serba Dinamik Development Sdn. Bhd. (SD Development) and SD Controls Sdn. Bhd. (SD Controls) had on Feb. 10 filed originating summons to the High Court of Malaya at Kuala Lumpur to be placed under judicial management.
Read Reorg’s coverage of Serba Dinamik HERE.
Sapura Energy Bhd
Subsidiaries of Malaysian integrated oil and gas services and solutions provider, Sapura Fabrication Sdn. Bhd. (SFSB), Sapura Project Services Sdn. Bhd. (SPSSB), Sapura Subsea Services Sdn. Bhd. (SSSSB), Sapura Offshore Sdn. Bhd. (SOSB), and Sapura Pinewell Sdn. Bhd. (SPSB), have been served with winding-up petitions, with total claim amounts amounting to MYR 46.9 million ($11.2 million).
Read Reorg’s coverage of Sapura Energy HERE.
Fundraising and People Moves
Edward Tong has joined HPS Partners as a managing director in Singapore to lead development of the private credit business in Asia for the firm, which will focus on providing scaled and flexible debt solutions across the capital structure. Tong was previously with Partners Group where he was managing director and Head of Private Debt, Asia, responsible for building and leading the private debt and direct lending business in Asia Pacific.
FTI Consulting, Inc. announced Feb. 7 it has hired Jason Ho as senior managing director and Asia Leader of the capital solutions offering within the firm’s corporate finance & restructuring segment, based in Hong Kong. The capital solutions team in Asia assists and provides solutions to corporates to enable opportunities such as acquisitions, refinancings and dividend recapitalisations. Ho joins FTI from Commerzbank AG in Hong Kong, where he was regional head of bonds for Greater China. Prior to Commerzbank, he was at Citigroup in the investment banking and capital markets originations departments. After Citi, Ho established offshore advisory and capital markets franchises for Chinese investment banks, starting in 2011 at ICBC International, where he led teams in China and Hong Kong as co-head of debt capital markets department and head of debt syndicate.
Partners Group has closed its third direct infrastructure program with commitments of $8.5 billion, according to a Feb. 14 press release. The program is anchored by Partners Group's third flagship direct infrastructure fund, which raised $6.4 billion, and includes an additional $2.1 billion committed via other managed private markets programs and bespoke client solutions that will invest alongside the fund. Investors include public and corporate pension plans, sovereign wealth funds, insurance companies, endowment funds, and foundations.
Ropes & Gray advised Asia Alternatives, an Asian private equity fund-of-funds, in the final close of $2 billion in new commitments across Asia Alternatives Capital Partners VI, LP and several fund vehicles. The funds are focused on building a diversified Asia private equity portfolio with an emphasis on top-performing local Asian fund managers. Over 85% of committed capital came from pre-existing relationships. The closing was announced on Jan. 25.
Week Ahead
Below is a list of events on the Reorg Asia Calendar for the next two weeks
In this column, managing editors Stephen Aldred and Shasha Dai take turns writing about trends in high yield, distressed debt, restructuring and bankruptcy in major Asian markets including China, Southeast Asia, India and Australia. For questions or comments, contact Stephen at saldred@reorg.com and Shasha at sdai@reorg.com. Send your people and fund news to asiaeditorial@reorg.com.
Current volatility in high-yield bond prices of Chinese real estate developers points to a fundamental trust issue.
That erosion of trust is tied to an erosion of confidence in information sources the market previously used to gauge the truth.
It’s the natural result of a steady stream of previously undisclosed private notes and guarantees. Alongside those are revelations of defective capital structures: an over-abundance of minority interests in subsidiaries, for example, and their potential interplay with default provisions in offshore notes - or their ability to restrict dividend upstreaming to support offshore debt. You can add to that the resignations of auditors, but more fundamental to the problem of trust is companies themselves being economical with the truth.
There are lessons to be learned from each new debacle, but each new debacle teaches the same lesson: don’t trust the information you’re given, whether it’s the company CEO or IR, the news you read, the former insider who now seems blindsided, the company accounts, or even official company statements.
If I’m pointing fingers – and I am – I might say Fantasia started it. Fantasia Holdings on Oct. 4, 2021 defaulted on the outstanding $205.7 million under its originally $500 million 7.375% notes, having previously given guidance and assurance to offshore noteholders that it had prepared sufficient cash to cover the maturity payment, and stating it would transfer the required funds offshore. On top of that, the company had paid off a previously undisclosed $100 million private note in late September, had tapped the offshore market for $750 million in the first half of the year, and had steadily bought back its own notes in the offshore market, while all the while guiding that it had sufficient cash to meet upcoming maturities.
Lesson learned? Don’t trust management assurances.
Logan Group’s $1 billion in previously undisclosed guaranteed debt is no revelation to Reorg reporters, who in June 2021 reported $212 million 7% private placement notes arranged through a chain of transactions among affiliates in March 2021. Sources have also long believed that the company had multiple off-balance-sheet liabilities, but the company’s routine denials reached new levels of absurdity in mid-January when senior management told investors on a project due diligence trip that they were “investigating” whether the rumoured notes were related to subsidiaries.
It has not been disclosed where the mysterious $1 billion in private notes were eventually found. Presumably they were behind Logan’s fridge or under its sofa cushions, which is where lost things usually are found when you’ve exhausted all other avenues of investigation.
Lesson learned? See Fantasia above. (And while I’m on this, is $1 billion the full story, or is there more to come? Asking for a friend.)
Zhenro Properties also seems to have taken a leaf out of the Fantasia playbook. Either that or someone had been drinking diesel oil when the company announced Jan. 4 that it would redeem $200 million 10.25% senior perps.
The company’s subsequent public silence as rumours swirled on Feb. 10 that it didn’t have the funds, and that it had in fact quietly disclosed it would not be able to call the notes, seems to have taught markets that you shouldn’t trust a call notice when a company issues one. Notes plummeted from the mid-90s on Feb. 9, into the 60s, the 50s, the 30s, then the 20s on Feb. 10 and 11, remaining volatile until the company announced on Feb. 18 a consent solicitation for the perps. In that notice Zhenro stated that subsequent to its Jan. 4 announcement, adverse market conditions – which presumably had not caused any problems before Jan. 4 - meant internal funds for debt servicing had become limited…
Following Zhenro’s example, Ronshine won last week’s award for bond volatility executed off the back of a 180-degree turn when its bonds shot up to the low 90s overnight from 70 on guidance that the company may indeed be able to repurchase its bonds.
Ronshine had previously guided widely that it would face a shortfall on repayment of its $500 million due March 1 notes. Despite that galling news, the notes then rose, from around 60 to near 70, and rumours swirled that friends, family and various associates were buying up the bonds. Lo and behold, the company then guided that it may after all be able to meet that bond repayment. The bonds rose overnight from around 70 on Feb. 17 to around 90 on Feb. 18.
It’s an open question whether regulators will investigate any of these events. It’s also debatable whether the current loss of trust will even have an impact on prospects for developers entering the capital markets in three, six, nine, 12 months from now, whenever it is that we get to whatever gets defined as normality.
Rationally, any company that is perceived as having lied about its intentions for repayment, has hidden private debt or is thought to have guided that it could not meet a maturity when it could, or could meet a maturity when it could not, should face not only regulatory investigation, but censure of the markets when it tries to raise new notes.
But will investors continue to have trust issues? Markets don’t really do therapy or 12 Step Healing programs.
At the risk of appearing overly cynical – which I am – it’s possible to see two outcomes, ostensibly binary, but in fact leading to the same outcome.
On the one hand, it’s possible to imagine that investors will look on current events as a one-off, a whirlwind of events driven upon developers by regulators in Beijing. Developers were not really deceitful, they were forced into it. In this scenario, the markets will see a set of Chinese developers chastened by their experience, reformed, restructured, and most importantly, with unencumbered offshore assets and ready to pay 12% for three-year money.
Or, investors will be older, wiser, jaded, and cautious. They will vow never to fall in love with a Chinese real estate developer again. Until they meet the right one, of course. The one with unencumbered offshore assets who is ready to pay 12% for three-year money.
--Stephen Aldred, Managing Editor
From Our Financial & Legal Analysts
Below are links to reports written this week by our financial and legal analysts.
- China Real Estate
- Shimao Group - Asset Disposal Analysis
- Agile Group - New Tear Sheet
- Hong Kong Court’s Rejection of PUFG Stay Applications Against Keepwell Claims Provides Guidance Around Recovery Issues for So-Called Chinese Credit Enhancements - Legal Analysis
AUSTRALIA
Nickel Mines Ltd.
Nickel Mines Ltd. announced Feb. 18, that it has completed the acquisition of its initial 10% interest in the Oracle Nickel Project which is currently under construction within the Indonesia Morowali Industrial Park in Central Sulawesi, Indonesia. The initial interest was secured via payment of $23 million to collaboration partner Shanghai Decent, which in addition to previously paid deposit amounts totalling $30 million, satisfies the required $53 million for the company to secure a 10% interest in the project, the announcement states.
Read Reorg’s coverage of Nickel Mines HERE.
North Queensland Export Terminal
North Queensland Export Terminal (formerly Adani Abbott Point Terminal), said in an announcement Feb. 16 that it welcomed orders given by the Supreme Court of Queensland on Feb. 15, which ordered respondent users to pay 90% of NXQT’s costs incurred in an original 2020 trial and 95% of NXQT’s costs of its successful appeal. The orders follow NXQT’s successful appeal in August 2021 on the matters of disputed terminal handling charges and alleged unconscionable conduct, as reported.
Read Reorg’s coverage of NXQT HERE.
Basslink Pty Ltd.
Hydro Tasmania announced Feb. 16, that further to its announcement Feb. 10 regarding termination of the Basslink Services Agreement (BSA), Basslink Pty Ltd.’s receivers have declined its offer for an interim arrangement under which key elements of the BSA would be put back in place for one month while parties discussed possible alternative arrangements. Hydro Tasmania said it remains willing to discuss with receivers an alternative commercial arrangement which would provide funding during the receivership and help transition the asset to an alternative commercial model.
Read Reorg’s coverage of Basslink HERE.
CHINA
China Real Estate
China has released a national policy on real estate presale escrow account regulation, which for the first time since the sector’s downturn, promises to allow developers to access funds in the accounts that are in excess of required escrow amount. Property bonds were up following the report.
Read Reorg’s coverage on China Real Estate HERE.
Shimao Group
During a conference call that Shimao management held with investors in a trust loan issued by CITIC Trust, the company proposed a 2.5-year extension of the principal payment. Investors criticized what they considered the company’s prioritizing repaying public bonds over the trust loan. A day earlier, Shimao had proposed repaying RMB 10 million per working day, which was pushed back by investors. CITIC Trust subsequently planned to give Shimao two to three working days to sweeten its proposed terms of extension before the trustee calls a default by the borrower.
Read Reorg’s coverage on Shimao Group HERE.
Ronshine China
This company’s due March notes were up 10 points before trading down four points on Feb. 16 amid rumors that it has bought back some of its own notes. A source close to the company confirmed that it faces an over $200 million funding shortfall for redeeming the due March notes.
Read Reorg’s coverage on Ronshine HERE.
Tus-Holdings
The company’s offshore subsidiary Tuspark Forward has wired sufficient funds to make two interest payments due Feb. 13 under two due 2024 notes.
Read Reorg’s coverage on Tus HERE.
Sunac China
This real estate developer is contemplating returning to the capital market to issue RMB 2 billion medium-term notes in the first quarter of this year, in a potential deal that sources said is a testament to the market’s confidence in Sunac’s financing capabilities and support from banks.
Read Reorg’s coverage on Sunac HERE.
Aoyuan Group
This property developer is in talks with a state-owned enterprise in Shandong province to potentially bring in the latter as a strategic investor. The SOE is conducting due diligence.
Read Reorg’s coverage on Aoyuan HERE.
Yango Group
This real estate company missed the previously-extended 10% principal payment originally due Feb 8 under an RMB 500 million ABN and proposed a further extension.
Read Reorg’s coverage on Yango HERE.
Zhenro Properties
This developer’s bonds and shares plunged on Feb. 11 over concern that it won’t redeem perpetual securities in early March as it has repeatedly said it would.
Read Reorg’s coverage on Zhenro Properties HERE.
INDIA/SOUTH ASIA
Srei Infrastructure Finance
A second forensic audit report conducted from April 1, 2016, to Sept. 30, 2020, by chartered accountant firm Saxena & Saxena, on INR 11.798 billion ($157.3 million) loans disbursed by Srei Infrastructure Finance Ltd. to IL&FS group, has found the loans worth INR 10.798 billion “were not disbursed in the normal course of business,” and alleged round-tripping of funds. Separately, lenders to Srei Infrastructure Finance and its subsidiary Srei Equipment Finance Ltd. are preparing the eligibility criteria for prospective resolution applicants ahead of announcing an invitation to submit expressions of interest (EoIs) shortly.
Read Reorg’s coverage on Srei Infrastructure Finance HERE.
Future Retail
Future Retail’s onshore lenders are as of now still undecided if they want to pursue a restructuring under the Reserve Bank of India’s June 7, 2019, circular relating to the framework of resolution of stressed assets, which was one of the proposals discussed at the Feb. 4 joint lenders meeting (JLM).
Read Reorg’s coverage on Future Retail HERE.
Dharani Sugars & Chemicals
A majority of lenders of Chennai-based Indian sugar company, Dharani Sugars & Chemicals Ltd., are in favour of a promoter-backed INR 3.5 billion ($46.77 million) one time settlement (OTS) plan and are in the process of providing an approval. The lenders have mandated SMC Capital as the financial advisor.
Read Reorg’s coverage on Dharani Sugars & Chemicals HERE.
Indiabulls Housing Finance
Indiabulls Housing Finance Ltd. in an investor presentation posted on Feb. 16, said that the company plans to issue INR 50 billion ($66.3 million) of sustainable bonds in the fiscal year 2022-2023.
Read Reorg’s coverage on Indiabulls Housing Finance HERE.
SOUTHEAST ASIA
Garuda Indonesia (Persero) Tbk
The Indonesian flag carrier looks unlikely to proceed with a U.K. scheme of arrangement, but will instead focus on restructuring its liabilities through its onshore Indonesian in-court supervised restructuring or PKPU. This comes as the clock is already ticking on the PKPU - set to expire in September - and with talks over the potential U.K. scheme seemingly stalled, as the company and its advisors engage in bilateral negotiations with lessors.
Read Reorg’s coverage of Garuda HERE.
PT Sawit Sumbermas Sarana Tbk
Bank Rakyat Indonesia (BRI) is approaching bank lenders for a syndicated loan for the Indonesian palm oil producer, as the company looks to refinance its $300 million 7.75% notes due 2023. Talks for the loan are at an early stage, and the bank did not indicate if it had an actual mandate from SSMS.
Read Reorg’s coverage of Sawit Sumbermas HERE.
PT Kawasan Industri Jababeka Tbk (Jababeka)
The new quorum for the third convening of the Indonesian industrial real estate developer’s AGM on Feb. 23 - following discussions with Indonesia’s Financial Services Authority (OJK) - has been set at 50% of shareholders’ present or represented. Shareholders at the AGM will vote on two resolutions - resolutions eight and nine - relating respectively to the provision of corporate guarantees by the company’s subsidiaries for its proposed $350 million bond issue, and an amendment and restatement of the company’s articles of association.
Read Reorg’s coverage of Jababeka HERE.
Sri Rejeki Isman Tbk (Sritex)
The company announced on Feb. 9 that it had received from the Semarang Commercial Court a cassation notice filed by its lenders Citibank N.A. Indonesia and QNB Indonesia against the company and its three subsidiaries to Indonesia’s Supreme Court on Feb. 2, confirming Reorg’s earlier reporting on the matter. Due to commencement of cassation proceedings, the homologation verdict does not yet have a permanent and final legal enforcement, and provisions stipulated in Sritex’s latest composition plan cannot be executed as yet.
Read Reorg’s coverage of Sritex HERE.
Serba Dinamik Holdings Bhd.
The Malaysian energy services company announced that its wholly-owned subsidiaries, Serba Dinamik Group Bhd. (SDGB) and its indirect wholly-owned subsidiaries, Serba Dinamik Sdn. Bhd. (SDSB), Serba Dinamik Development Sdn. Bhd. (SD Development) and SD Controls Sdn. Bhd. (SD Controls) had on Feb. 10 filed originating summons to the High Court of Malaya at Kuala Lumpur to be placed under judicial management.
Read Reorg’s coverage of Serba Dinamik HERE.
Sapura Energy Bhd
Subsidiaries of Malaysian integrated oil and gas services and solutions provider, Sapura Fabrication Sdn. Bhd. (SFSB), Sapura Project Services Sdn. Bhd. (SPSSB), Sapura Subsea Services Sdn. Bhd. (SSSSB), Sapura Offshore Sdn. Bhd. (SOSB), and Sapura Pinewell Sdn. Bhd. (SPSB), have been served with winding-up petitions, with total claim amounts amounting to MYR 46.9 million ($11.2 million).
Read Reorg’s coverage of Sapura Energy HERE.
Fundraising and People Moves
Edward Tong has joined HPS Partners as a managing director in Singapore to lead development of the private credit business in Asia for the firm, which will focus on providing scaled and flexible debt solutions across the capital structure. Tong was previously with Partners Group where he was managing director and Head of Private Debt, Asia, responsible for building and leading the private debt and direct lending business in Asia Pacific.
FTI Consulting, Inc. announced Feb. 7 it has hired Jason Ho as senior managing director and Asia Leader of the capital solutions offering within the firm’s corporate finance & restructuring segment, based in Hong Kong. The capital solutions team in Asia assists and provides solutions to corporates to enable opportunities such as acquisitions, refinancings and dividend recapitalisations. Ho joins FTI from Commerzbank AG in Hong Kong, where he was regional head of bonds for Greater China. Prior to Commerzbank, he was at Citigroup in the investment banking and capital markets originations departments. After Citi, Ho established offshore advisory and capital markets franchises for Chinese investment banks, starting in 2011 at ICBC International, where he led teams in China and Hong Kong as co-head of debt capital markets department and head of debt syndicate.
Partners Group has closed its third direct infrastructure program with commitments of $8.5 billion, according to a Feb. 14 press release. The program is anchored by Partners Group's third flagship direct infrastructure fund, which raised $6.4 billion, and includes an additional $2.1 billion committed via other managed private markets programs and bespoke client solutions that will invest alongside the fund. Investors include public and corporate pension plans, sovereign wealth funds, insurance companies, endowment funds, and foundations.
Ropes & Gray advised Asia Alternatives, an Asian private equity fund-of-funds, in the final close of $2 billion in new commitments across Asia Alternatives Capital Partners VI, LP and several fund vehicles. The funds are focused on building a diversified Asia private equity portfolio with an emphasis on top-performing local Asian fund managers. Over 85% of committed capital came from pre-existing relationships. The closing was announced on Jan. 25.
Week Ahead
Below is a list of events on the Reorg Asia Calendar for the next two weeks
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