Moody’s affirms Renhe following tender offer

Moody's Investors Service said it affirmed the Caa3 corporate family and senior unsecured ratings of Renhe Commercial Holdings Co. Ltd.

The outlook is negative.

The action follows Renhe's announcement Nov. 24 that it is implementing a tender offer and consent solicitation for: $300 million of 11¾% senior unsecured notes due May 2015 $600 million of 13% senior unsecured notes due September 2016.

The total consideration for the early tender, which will expire on Dec. 8, is $930 per $1,000 principal amount of the 2015 notes and $820 of the 2016 notes.

If the bondholders accept the offer after Dec. 8 – but before the final tender offer date of Dec. 30 – the total consideration will decrease to $880.10 for the 2015 notes and $770.10 for the 2016 notes.

The tender offer also includes amendments and waivers on covenants and events of default.

"If successful, the transaction will constitute a distressed debt exchange, which is a default event under Moody's definition. However, we would point out that such an event had already been factored into Renhe's Caa3 ratings," Moody's analyst Fiona Kwok said in a news release.

"The Caa3 ratings also consider the significant liquidity stress that Renhe faces, given the high degree of uncertainty regarding the success of the transaction."

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