Tus-Holdings unit Tuspark seeks consents to amend 7.95%, 6.95% bonds

By Marisa Wong

Los Angeles, Aug. 23 – Tuspark Forward Ltd. is soliciting consents from holders of its $380 million outstanding 7.95% bonds due 2024 (ISIN: XS1863988157) and $522.5 million outstanding 6.95% bonds due 2024 (ISIN: XS2011786659) guaranteed by parent company Tus-Holdings Co., Ltd. and subsidiaries Tuspark Innovation Venture Ltd. and Tuspark Technology Innovation Ltd.

The issuer is inviting holders to consent to some proposed amendments and waivers relating to the bonds, according to a company announcement Tuesday.

Proposals

Tuspark is proposing the following amendments for each series:

• Extension of the first mandatory redemption date and the second mandatory redemption date by 10 months and the new maturity date by 13 months and amendments to the instalment amount on the first mandatory redemption date and the second mandatory redemption date;

• Amendments to interest payments (including the payment of accrued interest);

• Adding two new mandatory upfront principal redemptions;

• Amendment of some provisions in connection with the registration of the cross-border security registration and the NDRC filing and amendment of the related events of default;

• Removal of the bondholder’s put right upon the occurrence of a no-registration event;

• Amendment of change of control;

• Amendment of the initial payments covenants and events of default to include due payment of the 2022 advisors’ fees;

• Change to the disposal proceeds covenant relating to the disposal of the relevant shares;

• Adding carve-outs to certain events of default in connection with three financing agreements;

• Extension of the deadlines for delivering financial statements; and

• Removal of the MOX listing covenant for the 6.95% bonds.

The issuer is also proposing the following waivers with respect to each series:

• Change of control following the equity transfer;

• Non-completion of the cross-border security registration;

• Non-payment of certain principal amount of the bonds and accrued interest;

• Cross-acceleration of certain indebtedness of the group and related proceedings; and

• Other non-compliance or potential non-compliance with the bonds or any of the bonds documents.

Details

The voting deadline is 11 a.m. ET on Sept. 7.

Meetings will be held in Hong Kong starting at 9:30 p.m. ET on Sept. 13 for the 7.95% bonds and at 9:45 p.m. ET on Sept. 13 for the 6.95% bonds.

If a quorum is not achieved at a meeting, an adjourned meeting will be held.

The quorum and the required majority to approve the proposals at each meeting are described in a separate consent solicitation memorandum (https://projects.morrowsodali.com/tusholdings).

The consent solicitations are only being made to persons other than U.S. persons under Regulation S.

Ineligible bondholders may still deliver consents, but their participation will not count toward the majority needed to approve the extraordinary resolution at each bondholder meeting.

The issuer is offering a base consent fee of 0.2% and an early consent fee of 0.5% to eligible bondholders and a base ineligible bondholder payment of 0.2% and early ineligible bondholder payment of 0.5% to ineligible bondholders.

The early consent fee and early ineligible bondholder payment deadline is 11 a.m. ET on Aug. 31.

Payment is expected to occur on or around Sept. 22.

Haitong International (+852 2848 4333, project.tuspark.lm.2022@htisec.com) is the solicitation agent.

Morrow Sodali Ltd. (+852 2319 4130 / +44 20 4513 6933, tusholdings@investor.morrowsodali.com) is the information and tabulation agent.

Previous developments

On Aug. 12, the issuer issued an announcement saying it believed an event of default under the terms and conditions of each of the 7.95% bonds and 6.95% bonds was likely to occur.

Considering its liquidity, the issuer anticipated it would not have enough financial resources to make the bonds’ interest payments and principal instalments due Aug. 15 or within the grace periods for those payments.

Tus-Holdings had said that despite its continued efforts to dispose of its assets to raise funds for its payment obligations under the bonds, it has been facing tremendous difficulty in disposing of its assets at a reasonable price or at all, due to a number of negative factors, including the deterioration of the Chinese property market, the Chinese macro-economic environment, the Covid-19 pandemic and policies related to that.

Therefore, the issuer, parent guarantor and subsidiary guarantors are facing short-term liquidity issues in meeting their payment obligations under the bonds.

The companies said they wanted to reassure creditors that they intend to proactively manage their exposure under the bonds in light of the current situation and market condition and therefore engaged in active discussions with bondholders about conducting liability management of the bonds on a consensual basis.

Haitong International Securities Co. Ltd. (project.tuspark.lm.2022@htisec.com) has been appointed as financial adviser and Linklaters as legal adviser. Sidley Austin is acting as a legal advisor for Haitong International.

In light of the anticipated events of default, trading of the bonds was suspended with effect from Aug. 15 until further notice.

The Beijing-based company is involved in environmental equipment development and manufacturing, solid waste disposal business, and other businesses.

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