ITNL liquidator asks holders of 7½% notes to review info before participating in buyback

By Marisa Wong

Los Angeles, Jan. 13 – Yit Chee Wah of FTI Consulting (Singapore) Pte Ltd., as liquidator of ITNL Offshore Pte. Ltd., made an announcement on Friday encouraging holders of ITNL’s RMB 1 billion 7½% notes due 2021 guaranteed by IL&FS Transportation Networks Ltd. to review a circular to creditors dated Jan. 13 for updated information impacting the estimated financial position and anticipated rate of return to creditors, including the 7½% noteholders.

The liquidator said this new information may impact or influence decision making when considering the previously announced invitation to holders to offer their notes for purchase by Deutsche Bank AG, London Branch, as an existing holder.

As reported, Deutsche Bank is proposing to purchase up to 50% of the original principal amount of the notes.

Specifically, Deutsche Bank plans to purchase up to RMB 500 million of the notes at purchase prices to be mutually agreed upon with qualifying noteholders participating in the offer.

The invitation is limited to all noteholders that are not located in or residents of the United States.

Any qualifying noteholder interested to offer its notes for purchase by Deutsche Bank should contact Suresh Ganesan (suresh.ganesan@db.com; +852 2203 8658); Ben Tsang (ben.tsang@db.com; +852 2203 8607); and Gautam Prasad (Gautam-b.prasad@db.com; +852 2203 7096) from Jan. 5 to Feb. 10.

Background

As disclosed before, ITNL’s liquidation process has encountered significant delays for various reasons. On top of that, additional costs will be expected to be incurred before any recovery can be expected from the issuer. As such, continued engagement from the issuer’s creditors, including the 7½% noteholders, will be critical in ensuring the liquidation process can be expedited, according to a notice dated Jan. 5.

In light of this, Deutsche Bank wants to consolidate a greater proportion of holdings in the notes in order to facilitate any potential action that noteholders may be required to take or agree to as a creditor class. Under the trust deed for the notes, any special quorum resolution by way of a meeting will require 75% of the outstanding amount of notes in order for the meeting to be quorate (or 25% at an adjourned meeting), as well as a voting threshold of 75% of the principal amount of the bonds present and voting at the meeting.

Deutsche Bank believes there is no identified group of noteholders that own such threshold principal amount required to take any action that would require a special quorum resolution (and this would include virtually all significant actions to be agreed to by noteholders as a creditor class).

IL&FS is a surface transportation infrastructure company based in Mumbai.

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