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Published on 11/18/2021 in the Prospect News Distressed Debt Daily, Prospect News Emerging Markets Daily and Prospect News Liability Management Daily.

Yango garners needed consents after second extension of solicitation

By Marisa Wong

Los Angeles, Nov. 18 – China’s Yango Justice International Ltd. has obtained the required consents from each of eight series of notes as of the second extended expiration deadline of its exchange offers and consent solicitations launched on Nov. 1, according to a company announcement on Thursday.

As of 11 a.m. ET on Nov. 17, the second extended expiration deadline, holders had tendered the following amounts of three series of notes for exchange and were deemed to have given exit consents:

• $217,306,000, or 87.98%, of the $247 million outstanding 10% senior notes due February 2023 (ISIN: XS2056435246);

• $175,310,000, or 87.66%, of the $200 million outstanding 5.3% senior notes due January 2022 (ISIN: XS2281349618); and

• $277,242,000, or 92.41%, of the $300 million outstanding 10.25% senior notes due March 2022 (ISIN: XS2008157856).

As of the first extended expiration deadline, the company had already received the required consents for five other series of notes included in the consent solicitation.

The company had extended the expiration deadline to 11 a.m. ET on Nov. 17 from 11 a.m. ET on Nov. 12 and, before that, from 11 a.m. ET on Nov. 10.

On Thursday, Yango Justice announced it will issue $669,858,000 principal amount of new 10¼% notes due Sept. 15, 2022 under the exchange offers and consent solicitations. Settlement will be on or around Nov. 23.

Notes tendered in the exchange offers with exit consents, the three series listed above, will be cancelled on the settlement date.

In addition, because the required consents have been obtained under the consent solicitations, the company will execute amended and restated indentures and supplemental indentures on Nov. 23. The exit consent waivers and consent solicitation waivers will also become effective on the settlement date.

Once the waivers have become effective, the company will apply to have the September 2024 notes resume trading on the Stock Exchange of Hong Kong Ltd.

On or around Nov. 29, the company will deliver in cash (i) an exchange and consent consideration of $25 per $1,000 principal amount of exchange offer notes (the three series above) tendered and accepted for exchange plus accrued interest; and (ii) a consent fee of $5 per $1,000 principal amount of consent solicitation notes (the other five series) for which consents have been delivered.

Exchange offers

As previously reported, Yango Justice offered to exchange new 10¼% notes due Sept. 15, 2022 for the existing February 2023, January 2022 and March 2022 notes.

According to a modification made to the exchange offer on Nov. 8, interest would be paid twice: one on the date that is six months after the original issue date and on the maturity date.

Previously reported, the note exchange would be an even exchange: $1,000 of new notes for $1,000 of existing notes.

In addition, exchanging noteholders would receive the $25 exchange and consent consideration and accrued interest in cash.

Yango Justice previously provided an update that as of the first extended expiration deadline, the minimum acceptance amounts had been satisfied for the January 2022 and the March 2022 notes. The company waived the condition for the February 2023 notes.

The company had accepted all of the notes that were tendered by the first extended deadline and planned to accept all notes by the second extended expiration deadline.

Put option

The February 2023 notes had a put option on Nov. 12. Noteholders who opted to exercise that option had to withdraw their notes in order to participate in the exchange offer. However, noteholders could not re-exercise their put option once the put option deadline passed, even if the exchange offer had fallen through.

The deadline for the withdrawal of the put option was the close of business on Nov. 8 (London time).

The company said that it had defaulted on the repurchase price, 102 plus interest, on the put date.

As a result, the company added a consent solicitation for all of the notes besides the 2023 notes for a waiver relating to any defaults on the February 2023 notes that would trigger a cross-default.

Tendering noteholders were deemed to have provided an exit consent and also an exit consent waiver.

The company needed consents from holders of a majority for the exit consent waivers to take effect.

Additionally, because of the default, the amended and restated indenture for the February 2023 notes will no longer be executed.

The holders of the September 2024 notes have right to declare acceleration of the notes to be immediately due and payable.

As of Nov. 15, the company had not received any noticed from holders of the September 2024 notes.

Trading in the September 2024 notes has been suspended, at the request of the company.

Consent solicitation

As previously reported, Yango Justice also solicited consents for the following five series of notes:

• $300 million outstanding 9¼% senior notes due April 2023 (ISIN: XS2100664544);

• $296 million outstanding 8¼% senior notes due November 2023 (ISIN: XS2122380822);

• $357 million outstanding 7½% senior notes due April 2024 (ISIN: XS2203986927);

• $280 million outstanding 7 7/8% senior notes due September 2024 (ISIN: XS2347769833); and

• $264 million outstanding 7½% senior notes due February 2025 (ISIN: XS2248032653).

Consenting noteholders will receive a $5 cash consent fee.

As of the first extended expiration deadline, the company received the required consents for each series.

All consents up to the first extended deadline were accepted, and at that point the company also expected to accept all of the consents by the second extended deadline.

Other details

The purpose of the exchange offers and the consent solicitations is to improve liquidity, avoid payment default and preserve options to stabilize the company and keep it as a going concern.

Had the exchange offers and consent solicitations not been successful, Yango Justice may not have been able to repay the existing notes at maturity and planned to engage Admiralty Harbour Capital Ltd. as a financial adviser to contemplate an alternative liability management exercise.

Admiralty Harbor Capital is the dealer manager and solicitation agent (+852 2110 1666, yango@ahfghk.com).

D.F. King & Co., Inc. is the information, exchange and tabulation agent for the exchange offer and consent solicitations (+44 20 7920 9700, +852 3953 7208, yango@dfkingltd.com, https://sites.dfkingltd.com/yango).

Yango is a real estate development company based in Shanghai.


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