China Water Property amends, extends solicitation for 12½% notes

By Jennifer Chiou

New York, Dec. 9 – China Water Property Group Ltd. announced changes to its previously announced consent solicitation for its HK$600 million of 12½% senior notes due 2016.

The consent solicitation was to expire at 11 a.m. ET on Dec. 8, but will now end at 11 a.m. ET on Dec. 15. It began on Nov. 24.

As of the original deadline, holders had delivered consents for HK$522.2 million, or about 87.03%, of the notes.

The company is soliciting consents to amend the trust deed and terms and conditions of the notes for flexibility to develop its infrastructure business.

The company said that its directors became aware on Dec. 5 that following the issue of an additional HK$250 million of notes in May 2014, four supplemental share mortgages out of 14 were not registered within the required period, thus resulting an event of default under the terms of the notes.

In addition to past proposed amendments, the company is updating its consent solicitation to include a waiver for this event of default and any present and future rights and claims in connection with the non-registration of the share mortgages.

As reported previously, the amendments would

• Affect financial covenants by deleting existing and adding in new benchmark financial ratios;

• Permit the company to make separate use of an exception to the limitation on restricted payments below a set amount;

• Permit the company to incur additional permitted debt with respect to certain intangible assets, inventories or receivables and incur additional permitted liens with respect to liens for certain intangible assets, inventories and receivables; and

• Permit the company to allocate the use of proceeds from the notes to projects other than existing and new property projects and general corporate purposes, namely two exclusive natural gas projects and new permitted businesses.

These amendments constitute a single proposal. A consenting holder must consent to the proposed changes in their entirety.

The amendments require consents from holders of a majority in principal amount of the outstanding notes.

The company is offering to pay a consent fee of HK$250 for each HK$100,000 principal amount.

Jefferies Hong Kong Ltd. (Asia.DCM@jefferies.com) is the solicitation agent. D.F. King & Co. Inc. (chinawater@dfking.com; 44 207 920 9700 or 212 269-5550) is the tabulation and information agent.

The property developer is based in Hong Kong.

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