Yida China Holdings cuts minimum denomination in exchange offer, says new notes putable

By Sarah Lizee

Olympia, Wash., March 2 – Yida China Holdings Ltd. announced that the minimum denomination of new notes under its previously announced exchange offer has been changed to $150,000 and integral multiples of $1,000 in excess thereof, according to a notice.

It was previously $200,000 and integral multiples of $1,000 in excess thereof.

The company also said it wanted to highlight the availability of a put option under the new notes, under which the company will, at the option of any holder of the new notes, repurchase all of the new notes held by such holder, or any portion of the principal thereof that is equal to the minimum denomination of the new notes or integral multiples of $1,000 in excess thereof on March 8, 2021 at par plus accrued interest, if any, to but not including March 8, 2021.

All other terms of the offer are unchanged, the company noted.

As previously reported, the company began an exchange offer and consent solicitation for its $300 million of 6.95% notes (ISIN: XS1598221338) due April 19, 2020.

The company said it’s offering to exchange a minimum of $225 million, or 75%, of the outstanding notes for new notes due 2022 and cash and that if the exchange offer and consent solicitation are not consummated, it may not have the funds to repay the existing notes at maturity.

For each $1,000 principal amount of existing notes, the company is offering $920 principal amount of new notes and $80 in cash.

The new notes will have an initial 10% coupon, which will step up to 14% after six months.

Under the consent solicitation, Yida China is seeking to remove substantially all of the restrictive covenants and certain events of default or other provisions under the existing note indenture.

By validly tendering their notes, holders will be deemed to have given consent in the consent solicitation. Holders may not give consents without tendering existing notes.

If less than 75% of the existing notes is tendered, the exchange offer and consent solicitation will lapse automatically. If 90% or more of the existing notes is tendered, the offer and solicitation will be automatically consummated, so long as some conditions are met. If in between 75% and 90% of the notes is tendered, the company said it will decide whether to proceed with the exchange offer and consent solicitation.

If the offer and solicitation are not consummated, the company said it will consider engaging Admiralty Harbour Capital Ltd. as its financial adviser to contemplate an alternative debt restructuring exercise.

The exchange offer and consent solicitation will expire at 11 a.m. ET on March 9.

Background

Yida China said Jiayou (International) Investment Ltd., a company indirectly held by China Minsheng Jiaye Investment Co., Ltd., holds 61.2% of Yida China’s total issued shares, and China Minsheng Investment Group Corp., Ltd. holds 67.26% equity interest in Minsheng Jiaye.

Asset freeze orders were imposed on China Minsheng in February and March 2019, including a freeze order in relation to China Minsheng’s interest in Minsheng Jiaye for a period of three years.

“The change in financial position of China Minsheng has negatively affected the company’s access to financing and led to the occurrence of certain triggering events under certain of the company’s loan agreements in the aggregate outstanding principal amount of RMB 4,277 million as of April 10, 2019,” according to the notice.

“Lenders of the Yida loans may demand immediate payment of the outstanding principal, accrued interest and all other amounts accrued or outstanding. As a result, certain of the company’s non-current borrowings were reclassified as current liabilities in the company’s consolidated financial statements as of Dec. 31, 2018 and the company’s unaudited condensed consolidated financial statements as of June 30, 2019, causing a surge in current borrowings on the company’s balance sheet.”

The company said its existing internal resources may be insufficient to repay the existing notes, its only offshore debt other than certain shareholder loans, and that it is conducting the exchange offer and consent solicitation to “improve its overall cash and financial condition, extend its debt maturity profile, strengthen its balance sheet and improve cash flow management.”

Admiralty Harbour Capital Ltd. (852 2110 1666 and yida_enquiries@ahfghk.com) is the dealer manager.

Morrow Sodali (+44 20 7355 0628, 852 2158 8405 and Yida@investor.morrowsodali.com) as information, exchange and tabulation agent.

Yida China Holdings is a business park developer and operator.

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