China's Renhe starts cash tender, solicitation for 11¾%, 13% notes

By Jennifer Chiou

New York, Nov. 24 – Renhe Commercial Holdings Co. Ltd. announced the launch of the cash tender offer for its $300 million of outstanding 11¾% senior notes due 2015 and $600 million of outstanding 13% senior notes due 2016.

The company is also soliciting consents for amendments to the note indentures and waivers, which will eliminate substantially all of the restrictive covenants in order to provide increased financial and operating flexibility. The waivers will waive any and all actual defaults or events of default that may have or will occur under the indentures.

According to a filing with the Singapore Exchange, the company said that as a result of its weak financial performance, ratings agencies have downgraded the notes’ ratings, including Standard & Poor’s to CCC from BB and Moody’s Investors Service to Caa3 from Ba2.

This downgrade makes it difficult for the company to raise additional capital through debt offerings in the international capital markets, the filing stated.

For each $1,000 principal amount of 11¾% notes, the company is offering $880 plus an early tender payment of $49.50, plus $0.50 for the total consent payment, which will constitute an early consent payment of $0.40 for the early consent payment and $0.10 for the consent payment.

For each $1,000 principal amount of 13% notes, the company is offering $770 plus an early tender payment of $49.50, plus $0.50 for the total consent payment, which will constitute an early consent payment of $0.40 for the early consent payment and $0.10 for the consent payment.

Renhe will also pay accrued interest to the settlement date.

The consent deadline is 5 p.m. ET on Dec. 8. The offer will end at 5 p.m. ET on Dec. 30.

The minimum tender amount is $100,000.

Renhe is seeking tenders and consents from holders of at least 75% of the total aggregate principal amount of each series.

In other news, the company is looking to being a rights issue of shares at a subscription price of HK$0.32 apiece.

Deutsch Bank AG, Singapore Branch is the dealer manager. Syntax GIS Ltd. is the information agent.

Renhe Commercial Holdings is a Harbin, China-based developer and operator of underground shopping centers.

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