China Evergrande sets coupon for new notes due 2021-2025 in exchange

By Susanna Moon

Chicago, June 19 – China Evergrande Group set the coupon for the new notes to be issued in exchange for its 8¾% senior notes due 2018, 12% senior notes due 2020, 7.8% senior private notes due 2019 and 8% senior notes due 2019.

As announced June 8, the company is offering new 2021 notes, new 2023 notes and new 2025 notes in exchange for tendered notes until 11 a.m. ET on June 20.

The coupon for the new notes was set at 6¼% for the new 2021 notes, 7½% for the new 2023 notes and 8¾% for the new 2025 notes.

The interest was set at the rates listed above “in consideration of the U.S. Federal Reserve increasing the interest rate by 0.25%, in order to maintain the friendly and mutually beneficial relationship between the company and the investors,” according to a company update on Monday.

The minimum coupon will be 5¾% for the new 2021 notes, 7¼% for the new 2023 notes and 8¾% for the new 2025 notes.

The company is offering an exchange value for each $1,000 principal amount as follows:

• For the 2018 notes, $1,043.75 principal amount of new 2021 notes, 2023 notes and/or 2025 notes plus capitalized interest;

• For the 2020 notes, $1,150 principal amount of new 2021 notes, 2023 notes and/or 2025 notes plus capitalized interest;

• For the 2019 private notes, a negotiable principal amount of new 2021 notes, 2023 notes and/or 2025 notes plus capitalized interest; and

• For the 2019 notes, $1,060 principal amount of new 2021 notes, 2023 notes and/or 2025 notes plus capitalized interest.

Settlement has been set for June 28.

The company said it is holding the exchange “to extend the maturity profile of the company’s existing foreign-currency denominated debt, improve its debt structure and lower its finance cost so as to enable the company to develop more steadily, which would allow the group to strengthen its balance sheets and cash flows management and to mitigate the potential impact of the PRC foreign-exchange controls on servicing offshore debt.”

The company said it may decide not to issue any new 2025 notes in the exchange if the issue amount is less than $300 million.

If no new 2025 notes are issued as a result of the unmet minimum condition, holders will instead receive new 2023 notes.

The concurrent new money issue is being conducted to refinance the group’s debt and for general corporate purposes.

The company said it expects to sell any new notes in the concurrent issue at a price of par and at the same terms of those issued in the exchange, with the new notes forming a single series with the corresponding new notes issued in the exchange.

Credit Suisse, China Citic Bank International and Haitong International are the dealer managers.

D.F. King (+44 20 7920 9700, +852 3953 7230, evergrande@dfkingltd.com or https://sites.dfkingltd.com/evergrande) is the information and exchange agent.

China Evergrande is a real estate development company based in Guangzhou, China.

© 2015 Prospect News.
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