Oceanwide’s failure to repay MTN, lawsuits trigger event of default

By Marisa Wong

Los Angeles, Sept. 3 – Oceanwide Holdings International Development III Co., Ltd. announced that an event of default has occurred under its 12% notes due 2021 (ISIN: XS1893891595) guaranteed by Oceanwide Holdings Co., Ltd., according to a company announcement on Friday.

The event of default was triggered by non-payment of the RMB 700 million 8˝% medium-term notes due Aug. 29, 2021 (extended to Aug. 30 because Aug. 29 was a public holiday) at their maturity. The total amount due under the MTNs was about RMB 700.5 million, inclusive of principal and interest.

The event of default was also triggered by litigation against the Beijing-based conglomerate and two related parties.

Oceanwide announced that several parties have filed lawsuits against China Minsheng Trust and Oceanwide before the Beijing Financial Court. Oceanwide’s controlling shareholder, China Oceanwide Holdings Group Co., Ltd., also has a controlling stake in China Minsheng Trust.

Langfang Shenghong Real Estate Development Co., Ltd. filed a lawsuit on Aug. 27 against China Minsheng Trust for failure to redeem when due certain trust units subscribed by Langfeng in an aggregate subscription amount of RMB 450 million under an assembled funds trust scheme.

In addition, Ruichang Longfu Enterprise Management Partnership filed a lawsuit on Aug. 27 against China Minsheng Trust for failure to redeem when due certain trust units in an aggregate subscription amount of RMB 60 million.

Yingda International Trust Co., Ltd. filed a lawsuit on Aug. 31 against Oceanwide and Wuhan CBD Co., Ltd. for Wuhan CBD’s failure to repay when due a total of RMB 889 million under a trust loan disbursed by Yingda and demanding Oceanwide discharge guarantee obligations as Wuhan CBD’s guarantor under that trust loan.

Background

In an announcement on Aug. 23, Oceanwide said it still had not made the April 30 interest payment on the 12% notes.

The non-payment had continued for a period of more than 30 consecutive days past the due date, and in June the company said it planned to settle the unpaid interest in full by Aug. 23.

However, as of Aug. 23 repayment had not yet been made. The guarantor now expects to settle the unpaid interest and the outstanding principal amount of notes by Nov. 23.

Oceanwide said it is still in the process of disposing of some offshore assets to improve its liquidity, and that disposal will not be able to generate cash inflow until its completion.

In addition, the Beijing-based conglomerate’s controlling shareholder, China Oceanwide Holdings Group Co., Ltd., disposed of some offshore assets to provide liquidity support to Oceanwide, but this disposal is still pending some regulatory clearance.

Consequently, repayment of the 12% notes has still not been made.

Impact of events of default

Because of the events of default, the trustee of the notes or holders of at least 25% of the notes may, by written notice to the company, declare the principal and accrued interest on the notes to be immediately due and payable.

Oceanwide said as of Sept. 3, it has not received any notice from the trustee or any holder with respect to exercising the acceleration right.

As of June 11, $210.2 million of the original $215 million principal amount remained outstanding.

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