China City Infrastructure gets needed consents to amend 12½% notes

By Marisa Wong

Madison, Wis., Dec. 16 – China City Infrastructure Group Ltd. (formerly China Water Property Group Ltd.) announced it obtained the necessary consents to amend its HK$600 million of 12½% senior notes due 2016.

As of 11 a.m. ET on Dec. 15, the expiration of the consent solicitation, holders of HK$537.2 million, or 89.53%, of the outstanding notes had delivered their consents to the proposed changes to the trust deed and terms and conditions of the notes.

The consent solicitation began on Nov. 24 and was originally set to expire at 11 a.m. ET on Dec. 8.

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

The company solicited consents to amend the notes for flexibility to develop its infrastructure business.

The company previously 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 in an event of default under the terms of the notes.

In addition to past proposed amendments, the company updated 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 earlier, the amendments

• 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 constituted a single proposal. A consenting holder had to consent to the proposed changes in their entirety.

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

The company will pay a consent fee of HK$250 per HK$100,000 principal amount for a total amount of HK$1,343,000.

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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