Tus-Holdings unit Tuspark cancels consent solicitation

By Mary-Katherine Stinson

Lexington, Ky., Sept. 13 – Tuspark Forward Ltd. canceled the consent solicitation for its $380 million outstanding 7.95% bonds due 2024 (ISIN: XS1863988157) and $522.5 million outstanding 6.95% bonds due 2024 (ISIN: XS2011786659) citing misunderstandings and misinterpretations of the consent solicitation in the market, according to a company notice.

Though the company stated in the press release that it has made efforts to clarify and communicate with the bondholders, it believes that any attempt to hinder or delay the approval of the consent solicitations is against the interest of the vast majority of the bondholders and will have a significant adverse impact on the willingness and level of support from its state-owned shareholders and the progress of the introduction of strategic investors in the future.

Meetings scheduled to be held in Hong Kong on Sept. 13 for the 7.95% bonds and on Sept. 13 for the 6.95% bonds have also been canceled.

Because of the cancellation, no consent fees will be paid.

The bonds are guaranteed by parent company Tus-Holdings Co., Ltd. and subsidiaries Tuspark Innovation Venture Ltd. and Tuspark Technology Innovation Ltd.

As previously reported, the issuer was inviting holders to consent to some proposed amendments and waivers relating to the bonds.

Proposals

Tuspark was 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 installment 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 was 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 was 11 a.m. ET on Sept. 7.

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

The issuer was 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 was 11 a.m. ET on Aug. 31.

Payment was scheduled for on or around Sept. 22.

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

Morrow Sodali Ltd. (+852 2319 4130 / +44 20 4513 6933, tusholdings@investor.morrowsodali.com) was 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 installments 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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