Wintime Energy
Wintime Creditor Committee to Meet by June End; Prepares for In-Court Restructuring; Wintime Bondholders Demand Low Debt to Equity Swap Conversion Price; Offshore Huachen Restarts Restructuring Talks Based on Cash Flow Forecasts
Wed 05/27/2020 05:17 AM
The China Development Bank-led creditors’ committee of Wintime Energy is planning to convene a meeting by the end of June to discuss their next steps before formally entering the company into a court-supervised restructuring process, according to two holder sources briefed by the company. In recently restarted discussions, onshore bondholders have raised their objection to the restructuring plan proposed in December but the company threatened to take a “direct judicial approach”, hinting that it would push the company into bankruptcy reorganization without a majority support from the onshore bondholders, the sources said.
Meanwhile, offshore noteholders of electricity generation subsidiary Huachen Energy are poised to restart negotiations with the company next month after Huachen’s financial advisor PricewaterhouseCoopers provided Houlihan Lokey, who advises the offshore ad hoc noteholders group, cash flow forecast at a meeting on May 15, a source close to the matter and two noteholder sources said.
Offshore holders are required to sign a non-disclosure agreement if they would like to access the financial figures, which would be used as the basis for the restructuring of the offshore notes. As reported, PwC met some non-ad hoc noteholders earlier this month and provided a timeline for upcoming restructuring talks.
The onshore bondholders of Wintime Energy have recently restarted talks with the company since the Covid-19 lockdown was gradually eased in China, the sources said. The restructuring plan proposed in December has yet to have the required majority support from onshore bondholders despite Wang Guangxi, Wintime’s chairman, telling an online earnings presentation last Friday (May 22) that most holders agreed with the proposal.
Most of the onshore bonds are expected to be paid off through the sale of assets and debt-to-equity swap, a plan that majority bondholders actually regard as “acceptable,” said the two sources. Holdout investors are unhappy about the high conversion price, which is set at RMB 1.94 per share under the current plan, a level that shows shareholders of the listco “take no haircut”, according to the second source.
Holdout bond investors instead requested a conversion price of RMB 1.4 per share, to which the Wintime creditor committee did not agree, said the same source.
As for the bank lenders, although they are the ones that would most likely see the up to 12-year term-out apply to them (because they are generally unable to take equity stakes in companies through debt to equity swap), bondholder sources noted that Wintime should have “no issue” with getting a greenlight from those favourable supporters under the arrangement of CBD-led creditor committee.
Wintime Energy has remained the gist of the reorganization plan unchanged from the December’s version while informing bondholders that it may seek “judicial approach” so as to push forward the reorganization, according to both sources.
The Supreme Court of China in late April ordered all the courts to transfer all the lawsuits against Wintime Energy and its affiliates to Shan'xi Jinzhong Intermediate People's Court, noted the sources.
As reported, CBD-led committee in December proposed a court-supervised restructuring of Wintime Energy’s debt through an RMB 15.908 billion ($2.29 billion) debt to equity swap and disposals of RMB 2.995 billion worth of assets to repay total interest-bearing debt of RMB 29.733 billion, with remaining debt to be termed out for 12 years.
For debt at the subsidiary level including Huachen Energy, it was proposed to conduct a sale of RMB 6.151 billion of non-core assets while the remaining interest-bearing debt would be repaid in 12 years at benchmark interest rate using operating cash flow.
During an earnings call on Friday, May 22, Chairman of Wintime Energy Wang Guangxi told onshore bondholders that the reorganization plan had been approved by the presidium of the creditors’s committee, and that “most of the bondholders that needed communication had agreed with the plan,” according to a written script of the earnings call. The company is going through some relevant reviewing process, said Chairman Wang in the conference, although a bondholder source told Reorg that Mr. Wang has been repeating the account for a while with progress of reorganization stalled.
The representative for the creditor committee of Wintime Energy declined to comment.
Update on Assets for Sale
As reported, Wintime in July 2018 put up multiple assets on block for sale including its stake in Huaying Petrochemical, a major asset at the listco level.
Wintime Energy’s wholly-owned subsidiary, Huaying Petrochemical, in turn directly holds a 49% stake in Huachen Energy.
According to a holder source briefed by the company recently, Wintime now expects the valuation of Huaying to go up as Huaying’s fuel oil blending distribution centre and terminal, which started trial operation on Oct. 17, is operating in good shape and estimated to generate “a few million of RMB revenues.”
The distribution centre and the terminal are located in Daya Bay, Guangzhou and equipped with one oil product terminal with a capacity of 300,000 tons and three oil product terminals with 20,000 tons capacity. It is expected they generate 21.5 million tons of port handling capacity, 10 million tons of storage capacity and 10 million tons of oil blending capacity annually, as reported.
At Huachen Energy’s level, in early March, the board of Wintime approved plans by Zhengzhou Yuzhong Energy, wholly owned subsidiary of Huachen Energy, to dispose of a 70% stake in Shaanxi Yihua Mining Co. through public listing for at least RMB 7.543 billion ($108 million).
Wintime Energy’s capital structure is as follows:
-- Skylar Chen
Meanwhile, offshore noteholders of electricity generation subsidiary Huachen Energy are poised to restart negotiations with the company next month after Huachen’s financial advisor PricewaterhouseCoopers provided Houlihan Lokey, who advises the offshore ad hoc noteholders group, cash flow forecast at a meeting on May 15, a source close to the matter and two noteholder sources said.
Offshore holders are required to sign a non-disclosure agreement if they would like to access the financial figures, which would be used as the basis for the restructuring of the offshore notes. As reported, PwC met some non-ad hoc noteholders earlier this month and provided a timeline for upcoming restructuring talks.
The onshore bondholders of Wintime Energy have recently restarted talks with the company since the Covid-19 lockdown was gradually eased in China, the sources said. The restructuring plan proposed in December has yet to have the required majority support from onshore bondholders despite Wang Guangxi, Wintime’s chairman, telling an online earnings presentation last Friday (May 22) that most holders agreed with the proposal.
Most of the onshore bonds are expected to be paid off through the sale of assets and debt-to-equity swap, a plan that majority bondholders actually regard as “acceptable,” said the two sources. Holdout investors are unhappy about the high conversion price, which is set at RMB 1.94 per share under the current plan, a level that shows shareholders of the listco “take no haircut”, according to the second source.
Holdout bond investors instead requested a conversion price of RMB 1.4 per share, to which the Wintime creditor committee did not agree, said the same source.
As for the bank lenders, although they are the ones that would most likely see the up to 12-year term-out apply to them (because they are generally unable to take equity stakes in companies through debt to equity swap), bondholder sources noted that Wintime should have “no issue” with getting a greenlight from those favourable supporters under the arrangement of CBD-led creditor committee.
Wintime Energy has remained the gist of the reorganization plan unchanged from the December’s version while informing bondholders that it may seek “judicial approach” so as to push forward the reorganization, according to both sources.
The Supreme Court of China in late April ordered all the courts to transfer all the lawsuits against Wintime Energy and its affiliates to Shan'xi Jinzhong Intermediate People's Court, noted the sources.
As reported, CBD-led committee in December proposed a court-supervised restructuring of Wintime Energy’s debt through an RMB 15.908 billion ($2.29 billion) debt to equity swap and disposals of RMB 2.995 billion worth of assets to repay total interest-bearing debt of RMB 29.733 billion, with remaining debt to be termed out for 12 years.
For debt at the subsidiary level including Huachen Energy, it was proposed to conduct a sale of RMB 6.151 billion of non-core assets while the remaining interest-bearing debt would be repaid in 12 years at benchmark interest rate using operating cash flow.
During an earnings call on Friday, May 22, Chairman of Wintime Energy Wang Guangxi told onshore bondholders that the reorganization plan had been approved by the presidium of the creditors’s committee, and that “most of the bondholders that needed communication had agreed with the plan,” according to a written script of the earnings call. The company is going through some relevant reviewing process, said Chairman Wang in the conference, although a bondholder source told Reorg that Mr. Wang has been repeating the account for a while with progress of reorganization stalled.
The representative for the creditor committee of Wintime Energy declined to comment.
Update on Assets for Sale
As reported, Wintime in July 2018 put up multiple assets on block for sale including its stake in Huaying Petrochemical, a major asset at the listco level.
Wintime Energy’s wholly-owned subsidiary, Huaying Petrochemical, in turn directly holds a 49% stake in Huachen Energy.
According to a holder source briefed by the company recently, Wintime now expects the valuation of Huaying to go up as Huaying’s fuel oil blending distribution centre and terminal, which started trial operation on Oct. 17, is operating in good shape and estimated to generate “a few million of RMB revenues.”
The distribution centre and the terminal are located in Daya Bay, Guangzhou and equipped with one oil product terminal with a capacity of 300,000 tons and three oil product terminals with 20,000 tons capacity. It is expected they generate 21.5 million tons of port handling capacity, 10 million tons of storage capacity and 10 million tons of oil blending capacity annually, as reported.
At Huachen Energy’s level, in early March, the board of Wintime approved plans by Zhengzhou Yuzhong Energy, wholly owned subsidiary of Huachen Energy, to dispose of a 70% stake in Shaanxi Yihua Mining Co. through public listing for at least RMB 7.543 billion ($108 million).
Wintime Energy’s capital structure is as follows:
Click HERE to enlarge
-- Skylar Chen
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