Hong Kong’s Greenland gets needed holder consents to prevent defaults

By Marisa Wong

Los Angeles, Nov. 22 – Greenland Global Investment Ltd. announced the results of its consent solicitations launched on Oct. 31. Greenland was seeking holder consent to some amendments and waivers relating to nine securities that list Greenland Holding Group Co. Ltd. as guarantor.

The issuer and guarantor announced on Tuesday that the extraordinary resolution for each series was passed at the relevant meeting.

The quorum required for, and the required majority of votes cast at, each meeting was satisfied by eligible holders in respect of the relevant extraordinary resolution, regardless of any participation at such meeting by ineligible holders, the company said.

Because the eligibility condition has been satisfied for each series, all extraordinary resolutions have been passed. Accordingly, the issuer has decided to implement all extraordinary resolutions.

For each series, following the passing of the relevant extraordinary resolution and the satisfaction of the eligibility condition and subject to the payment of the consent fees and any ineligible holder payments and, in the case of the November 2022 notes, the payment of the upfront payment, the proposed amendments and waivers will become effective on Nov. 25 upon the execution of the amendment documentation for each series.

As a result, any default, event of default or potential default under the terms and conditions of the relevant series that may have occurred or may occur in connection with the proposed amendments and any default, event of default or potential event of default under the terms and conditions of the relevant series that may have occurred or may be continuing as of the amendment effective date will have been waived by the holders, and the issuer will not be in default under the amended terms and conditions of each series.

The issuer also announced on Tuesday that the consent fees and any ineligible holder payments for each series and the upfront payment for the November 2022 notes will be payable on Nov. 25.

A pool factor of 90% currently applies to the June 2023 notes held through the clearing systems such that the outstanding nominal amount of the June 2023 notes corresponds to the pool factor multiplied by the nominal amount of the June 2023 notes shown in the records of the clearing systems.

Accordingly, the consent fees or any ineligible holder payments to be paid to each holder of the June 2023 notes will be calculated based on the nominal amount (after having been adjusted for the clearing system pool factor).

Securities

The securities covered in the solicitation were the following:

• $361,890,000 outstanding 5.6% notes due November 2022 (ISIN: XS2076775233);

• $26,882,000 outstanding 6Ό% notes due December 2022 (ISIN: XS2188664929);

• $270,447,0003 outstanding 5.9% notes due February 2023 (ISIN: XS1760383577);

• $398.5 million outstanding 6 1/8% notes due April 2023 (ISIN: XS2207192191);

• $479.78 million outstanding 6Ύ% notes due June 2023 (ISIN: XS2016768439);

• $500 million outstanding 6 3/8% notes due September 2023 (ISIN: XS2055399054);

• $299.35 million outstanding 6Ύ% notes due March 2024 (ISIN: XS2108075784);

• $246 million outstanding 7Ό% notes due January 2025 (ISIN: XS2207192605); and

• $599 million outstanding 5 7/8% guaranteed bonds due 20244 (ISIN: XS1081321595).

The amounts above do not include amounts held by the issuer, guarantor and their respective subsidiaries which have been purchased but not canceled.

Background

Due to the Covid pandemic and a downturn in the Chinese real estate industry, Greenland does not anticipate it will be able to repay the outstanding notes due in November on their maturity date and foresees difficulties in repaying the other series of securities in full on their respective maturity dates.

As an overview, the company was seeking to extend the maturity date of the notes due June 2023 by one year and all of the other series by two years. Additionally, noteholders were being asked to waive any potential or actual default as a result of the non-payment of the November 2022 notes.

Had the consent solicitations not been successful, the issuer and the guarantor would have proposed to make a partial redemption of 5% of the aggregate principal/nominal amount outstanding of the securities on the payment date (in the case of the November 2022 notes) or on their original maturity dates (in the case of the other series of the securities).

The company also intends to pay interest when due and payable.

Amendments

As mentioned above, the company wanted to extend the maturity date on the notes due in June 2023 one year to June 25, 2024. Also, the company was seeking consent to extend all of the maturity dates on the other securities two years.

Also mentioned above, the company proposed to make a 5% partial redemption on the relevant dates.

The amendments additionally include a new specified asset sale for the guarantor to procure the net consideration to be applied towards payment of principal, interest and any other amount.

There is a call option for the issuer to redeem the securities at any time prior to the new maturity dates.

The amendments include a grace period of seven days for principal payments and 30 days for interest payments.

Noteholders were being asked to approve a carving out from the cross-acceleration condition or cross-default condition (as the case may be) any default or event of default under or in connection with any other series.

The solicitation included making relevant amendments relating to the NDRC filing and SAFE registration provisions (including changing the registration deadline to 180 calendar days after the amendment effective date).

Also, the November 2022 notes will not have to be listed anymore and were to be delisted on Nov. 13.

Noteholders were also asked to waive any default or potential default.

Details

Noteholder meetings started at 10:30 p.m. ET on Nov. 21 at the offices of Linklaters in Hong Kong.

There is an early consent fee of 0.5% of the principal amount of the relevant series to be paid for holders who submitted votes in favor by the 11 a.m. ET Nov. 11 early consent fee deadline.

There is a base consent fee of 0.25% of the principal amount for votes in favor that were submitted after the early consent fee deadline but before the 11 a.m. ET Nov. 18 voting deadline.

Ineligible holders were eligible for an equivalent payment, similar to the consent fees. The deadlines are the same.

The solicitation agents are BOCI Asia Ltd. (+852 3988 6302, Project.Greenland.LM@bocigroup.com) and CLSA Ltd. (+852 2600 8888, project.greenland@clsa.com).

Kroll Issuer Services Ltd. is the information and tabulation agent (+44 20 7704 0880, +852 2281 0114, greenland@is.kroll.com).

Greenland is a Shanghai-based real estate developer.

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