China Essence borrows funds to make payment on redeemed convertibles

By Marisa Wong

Madison, Wis., Feb. 23 - China Essence Group Ltd. said it made the outstanding payment of principal and accrued interest on its guaranteed convertible bonds that were called for redemption on Feb. 15.

The payment was made using proceeds from a HK$12 million interest-free loan from the company's chief executive officer, Zhao Libin.

Trustee Hongkong and Shanghai Banking Corp. Ltd. confirmed on Feb. 21 that it received the payment.

As previously reported, China Essence was supposed to redeem HK$30 million of its convertible bonds on Feb. 15 but was unable to make the payment of the principal amount and accrued interest on time.

The company said the payment was delayed due to the Chinese New Year holidays in China and the fact that the transfer amount was large. Because the local government took a long time to process the funds, the payment was not made on Feb. 15.

On Feb. 16, trustee Hongkong and Shanghai Banking issued a letter to the company requesting that the amounts due on Feb. 15, together with accrued default interest to the date of actual payment, be paid immediately. The notice did not, however, demand that all of the bonds be due and payable immediately.

China Essence previously said that it does not anticipate that such a delay will occur again.

This is the company's first redemption of the bonds. As announced in December, holders voted to extend the maturity of the bonds to Dec. 31, 2014 from Dec. 20, 2011 and passed a resolution for the bonds to be redeemed in seven installments.

In addition, the total outstanding principal amount of the bonds was restated to HK$260 million from HK$250 million, and the redemption amount was reduced to par from 150.7149.

The bonds, which originally had a coupon of 0%, are currently subject to an interest rate of 4.5% and may be converted into common shares at a price of S$0.70 per share, lowered from S$0.7775.

China Essence is an integrated producer of potato products in China and is based in Beijing.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.