Oceanwide applies for restructuring; debts still outstanding

By Marisa Wong

Los Angeles, June 30 – Oceanwide Holdings Co., Ltd. still has not fulfilled the settlement agreement in relation to two sets of debt owed to China Tonghai International Financial Ltd., according to a notice from China Tonghai on Friday. Oceanwide Holdings is an indirect shareholder of China Tonghai.

The settlement agreement was affected by an application for restructuring of Oceanwide Holdings.

Restructuring application

On April 25, Oceanwide Holdings announced it had received a notification from Beijing Shiwang Asset Management Co., Ltd. of an application for restructuring. On April 21 Beijing Shiwang made an application to the Beijing No. 1 Intermediate People’s Court for the restructuring of Oceanwide Holdings on the basis that Oceanwide Holdings is unable to pay off its debts when due, its assets are not sufficient to settle all outstanding debts, but its assets have sufficient value for restructuring.

On the same date, Beijing Shiwang made an application to the court for the pre-restructuring of Oceanwide Holdings.

Beijing Shiwang is one of Oceanwide Holdings’ creditors but is not related to China Tonghai or to the settlement arrangements.

On April 27, Oceanwide Holdings further announced that the court issued a decision to begin a pre-restructuring process.

However, as of May 4, Oceanwide Holdings had not received any decision from the court in relation to any formal restructuring, which remains uncertain.

In a May 4 announcement, China Tonghai pointed out that the pre-restructuring and potential restructuring could hinder the settlement arrangements for debt A and debt B and that the applications significantly increased the uncertainty of completing the settlement arrangements by the longstop date of June 30.

In Friday’s announcement, China Tonghai said the settlement agreement did indeed lapse, and as a result the settlement arrangement in relation to debt A and debt B will not proceed.

Settlement agreement

Under the settlement agreement dated Aug. 24, 2021, Oceanwide Holdings and China Oceanwide Holdings Ltd. had conditionally agreed to transfer two tranches of consideration shares, tranche A and tranche B, to China Tonghai in order to settle debt A and debt B, respectively.

Debt A comprises debt owed to three China Tonghai subsidiaries in the aggregate amounts of HK$691 million and $103 million. Debt B is debt owed to another China Tonghai subsidiary in the amount of HK$480 million.

The consideration shares are issued shares of Wuhan CBD Co., Ltd.

Accrued interest for debt A and debt B are to be paid in cash.

Oceanwide is a Beijing-based conglomerate.

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