Haier begins consent bid to amend HK$8 billion exchangeables due 2022

By Sarah Lizee

Olympia, Wash., July 31 – Harvest International Co., Haier Smart Home Co., Ltd., Haier Shareholdings (Hong Kong) Ltd. and Flourishing Reach Ltd. launched a consent solicitation for Harvest’s HK$8 billion zero-coupon guaranteed exchangeable bonds due 2022 (ISIN: XS1716796641) in connection with a proposed corporate reorganization, according to a notice.

The bonds are currently exchangeable into the ordinary shares of Haier Electronics Group Co., Ltd. and unconditionally and irrevocably guaranteed by Haier Smart Home and Haier Shareholdings.

For internal corporate reorganization purposes, Haier Smart Home is proposing to procure the transfer of all the shares held by Haier HK as at the date of transfer, including the exchange property, to the new guarantor, Flourishing Reach, a wholly owned subsidiary Haier Smart Home, and consequentially, the release and discharge of the guarantee obligation of Haier HK in respect of the bonds and replacement of it by a guarantee obligation of the new guarantor.

Under the privatization proposal, a holder of each scheme share will receive 1.6 new H shares from Haier Smart Home and cash payment of HK$1.95.

If the extraordinary resolution is passed, the bonds’ exchange right will be replaced with the right to convert the bonds into H shares.

The conversion right attached to any bond may be exercised by the holder thereof at any time on or after the effective date of the proposal and up to the close of business on the date that falls 10 days prior to the maturity date.

If bonds have been called for redemption prior to the maturity date, then the bonds will be convertible up to the close of business on the date which falls 10 days prior to the date fixed for redemption.

The initial conversion price of the bonds before the initial adjustment date will reflect the combined effect of (a) the relevant exchange price of the bonds and (b) the share exchange ratio, being 1.6 new H shares for every scheme share cancelled under the scheme.

The conversion price will also reflect the additional economic effect for an amount equivalent to the cash payment.

Holders will no longer be able to request the issuer to redeem their bonds upon delisting after the satisfaction of all conditions.

No adjustment to the exchange property will be made due to the cash payment.

A bondholder meeting will be held at 9 p.m. ET on Aug. 27.

If bondholders representing not less than 90% of the bonds deliver electronic voting instructions in favor of the extraordinary resolution prior to the deadline, the extraordinary resolution will be approved by way of electronic consent and no extraordinary resolution will be tabled for consideration at any meeting.

The consent solicitation agent is J.P. Morgan Securities (Asia Pacific) Ltd. (JPM_HAIER_EB_CONSENT_2020@jpmorgan.com).

The information and tabulation agent is Hongkong and Shanghai Banking Corp. Ltd. (daphne.t.y.yeung@hsbc.com.hk, amyhychim@hsbc.com.hk, antony.p.y.chong@hsbc.com.hk, frederick.wayman@hsbc.com.hk).

Hong Kong-based Haier makes and sells washing machines and water heaters.

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