Guorui Properties offers to exchange 13½% senior notes due 2022 for new notes, cash

By Rebecca Melvin

New York, Jan. 12 – China’s Guorui Properties Ltd. has begun an exchange offer and consent solicitation for $455 million principal amount outstanding of its 13½% senior notes due 2022, according to an announcement on Tuesday.

Under a separate offering memorandum, the company is also offering to sell additional new notes, which will be used to refinance the existing notes and for general corporate purposes.

For each $1,000 principal amount outstanding of existing notes validly tendered, holders will receive $1,077.041 of new notes and cash in lieu of any fractional amount of the new notes not issued.

The interest rate of the new three-year notes is 14¼%. The new Regulation S notes are putable after 15 months at par plus accrued and unpaid interest.

The exchange offer and solicitation agreement expires at 11 a.m. ET on Jan. 18. The amount of new notes issued will also be announced on Jan. 18. Settlement will occur on Jan. 25 with listing of the new notes on the Hong Kong Stock Exchange planned Jan. 26. The company may extend, withdraw or terminate the exchange and solicitation if certain conditions are not met.

The company said it is refinancing the existing notes to improve its debt structure, extend its debt maturity profile, strengthen its balance sheet and improve cash flow management.

Fitch Ratings Ltd., which rated the new notes B-, said the rating reflects uncertainty over the refinancing arrangement of the 2022 notes, which are putable in February. The rating agency also said that if the offshore debt is not successfully refinanced it will lead to a multiple-notch downgrade of Guorui ratings.

Haitong International is dealer manager of the exchange, and D.F. King is the information, tabulation and exchange agent. Haitong International is also acting as sole global coordinator, lead manager and bookrunner of the new money issuance.

The homebuilder is incorporated in the Cayman Islands under the name Glory Land Co. Ltd., and based in Beijing.

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