Easy Tactic offers options for upcoming maturity of its $725 million 5¾% notes due Jan. 13

By Rebecca Melvin

Concord, N.H., Dec. 15 – Easy Tactic Ltd. is offering to purchase for cash its $725 million outstanding 5¾% senior notes due Jan. 13, 2022 (ISIN: XS1545743442) via two options.

The company is also seeking consents to amend the issue to extend the maturity by six months, and includes a third option under the offer/consent solicitation for ineligible U.S. holders to participate in the solicitation.

If the tender offer and consent solicitation are not successfully consummated, the company may not be able to redeem the notes fully at maturity, according to the company’s announcement.

Under option A, the company is offering to purchase any and all notes of holders for a purchase price of $830 plus accrued interest. Under option B, the company is offering to purchase any and all notes of holders for par plus interest, 50% of which may be accepted by the company.

The company may set a maximum acceptance amount for the option A offer and/or the option B offer, which will be announced as soon as practicable.

The offer expires at 11 a.m. ET on Jan. 4.

The company also invites all eligible holders to approve, by extraordinary resolution, the proposed amendments to the terms and conditions of the notes, including extending their maturity to July 13, 2022.

The company will pay holders a $1.00 per $1,000 principal amount of the notes fee for validly tendered notes under an option A or option B instruction. With an option C instruction, the company will pay the fee to ineligible investors. Each beneficial owner may submit only one instruction, not a combination of instructions, to participate in the tender offer and/or consent solicitation.

Settlement will be on Jan. 10, 2022.

The Singapore exchange-listed notes were issued in two tranches, including $265 million of the notes issued on Jan. 13, 2017 and $460 million of the notes issued on Jan. 20, 2017.

J.P. Morgan Securities plc (+852 2800 7632, +852 2800 0875) is the dealer manager.

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

Included in the company’s launch announcement was background explaining the tender offer plan. It stated that “during the second half of 2021, Chinese property developers and the capital markets that have funded growth and development of the sector have experienced an inflection point. Reduced bank lending for real estate development has resulted in reduced access by property developers to onshore capital.

“In addition, reduced bank lending for mortgage finance for buyers, as well as concerns of buyers about the ability of property developers to complete projects, has resulted in reduced property sales. Adverse reaction to these onshore events by offshore capital markets has made access to offshore capital difficult for property developers like the group and has limited the group’s funding sources to address upcoming maturities.”

The group also announced on Dec. 7 that it is working to generate sufficient offshore cash flow to meet its offshore financial commitments and there are several milestones that it needs to achieve for those commitments. However, there is no assurance it will be able to complete the milestones as planned, which may adversely affect its offshore liquidity.

Over the past 12 to 18 months, the group’s management has demonstrated its resolution and commitment to mitigate the effects from recent adverse market conditions, including through expenditure conservation, reduction of land banking, asset sales and opportunistic financing. In particular, the group and its major shareholders have disposed of some assets to satisfy contractual commitments, such as the disposal of 30% interest in Guangzhou International Airport R&F Integrated Logistics Park and equity interests in R&F property management companies.

The asset sale proceeds have been applied primarily to liquidity improvement, under which the current tender offer and consent solicitation falls.

Easy Tactic is a special purpose vehicle of Guangzhou, China-based real estate developer R&F Properties.

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