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Chinas Easy Tactic starts consent solicitation to avoid defaults
Chicago, June 17 Easy Tactic Ltd. started consent solicitations for 10 series of notes on Friday to extend the maturity dates and ideally avoid any default, according to an announcement.
Like other Chinese real estate developers, Easy Tactic has had reduced access to bank lending and a deterioration of contracted sales.
With a backdrop of adverse market conditions, the company is asking noteholders to consent to maturity date extensions.
Amendments
Specifically, the company is seeking to extend the maturity date of the notes and amend the interest rates.
The amendments would eliminate the requirement to maintain and fund the interest reserve account.
There would be mandatory early redemption provisions, including upon completion of specified asset disposal, granting security of designated accounts, semiannual reporting and application of amounts in designated accounts.
The company noted that should certain disposals of projects in Malaysia or London occur, proceeds would be used to partially refinance the notes.
The event of default provisions would be amended and there would be certain minor amendments to the covenants.
Default waivers
In addition to the amendments to the terms of the notes, the company is also proposing that any default or events of default be waived from the following events:
Failure to maintain the minimum balance in the interest reserve account;
Failure to redeem and non-payment of principal and/or interest of certain borrowings;
Certain legal proceeding in connection with the hotel notes;
Non-payment of interest on the July 2024 notes on July 11; and
Failure to provide certain certificates and notices pursuant to trust deeds and terms and conditions of the notes.
Consent details
A consent fee of $5 per $1,000 principal amount of notes will be paid to noteholders who deliver instructions in favor of the extraordinary resolution and help to duly execute the restructuring support agreement.
The meeting needs to be quorate, all extraordinary resolutions for each series need to be passed, the consent conditions need to be satisfied, the amendments and waivers need to be executed, and then the consent fee will be paid.
Instructions will come from either eligible holders of notes or ineligible holders of notes. For ineligible holders, the payment will be the same, but it will be called an ineligible noteholder payment.
The deadline for instructions is 11 a.m. ET on July 7.
The payment date and the amortizing notes settlement date for the consent solicitations are expected for July 12.
Restructuring support
If the consent solicitation for a series is not successful, the company may consider launching a scheme of arrangement in the United Kingdom.
The terms would be different from the consent solicitations but open to all holders of the notes.
Each noteholder who participates in the consent solicitation is also required to execute the restructuring support agreement.
More details are available at https://projects.morrowsodali.com/guangzhourf.
An alternative instruction fee will be paid of 0.5% if the consent solicitation is unsuccessful and the restructuring effective date occurs. Consenting creditors need to execute the restructuring support agreement before 11 a.m. ET on July 8.
Notes covered
The following notes are covered in the consent solicitation:
$265 million 5Ύ% senior notes due 2022 (ISIN: XS1545743442);
$300 million 9 1/8% senior notes due 2022 (ISIN: XS1940202952);
$360 million 12 3/8% senior notes due 2022 (ISIN: XS2255777224);
$500 million 5 7/8% senior notes due 2023 (ISIN: XS1720054383);
$450 million 8 1/8% senior notes due 2023 (ISIN: XS1956133893);
$500 million 11Ύ% senior notes due 2023 (ISIN: XS2293918285)
$375 million 8 5/8% senior notes due 2024 (ISIN: XS1956169657);
$400 million 8 5/8% senior notes due 2024 (ISIN: XS2125172085);
$450 million 8 1/8% senior notes due 2024 (ISIN: XS2025848297); and
$325 million 11 5/8% senior notes due 2024 (ISIN: XS2307743075).
Amortizing notes
The consent solicitation also mentions that subject to the consent conditions, there will be three groups of notes listed on the Singapore Exchange if all goes well.
The notes will be replacement notes.
The company will be listing 6½% senior notes due 2025, 6½% senior notes due 2027 and 6½% senior notes due 2028.
More details
The meetings will be held at 5 a.m. ET on July 11.
J.P. Morgan Securities (Asia Pacific) Ltd. (+852 2800 7632, +852 2800 0875, Liability_Management_gzrf@jpmorgan.com) and Arta Global Markets Ltd. (+852 3513 8270, +852 3513 8184, gcm_gzrf@artatechfin.com) are the solicitation agents.
Morrow Sodali Ltd. (+44 20 4513 6933, +852 2319 4130, GuangzhouRF@investor.morrowsodali.com) is the tabulation and information agent.
Easy Tactic is a special purpose vehicle of Guangzhou, China-based real estate developer R&F Properties.
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