China’s Haimen Zhongnan misses 2024 notes’ coupon during grace period

By Wendy Van Sickle

Columbus, Ohio, Nov. 7 – Haimen Zhongnan Investment Development (International) Co., Ltd. said the interest due on its 11½% senior notes due 2024 was not paid during the 30-day grace period.

The payment was due on Oct. 7, and the non-payment will constitute an event of default under the notes, according to a Monday announcement.

Parent company Jiangsu Zhongnan Construction Group Co., Ltd. guarantees the notes. As of Monday, neither the guarantor nor the issuer had received a notice of acceleration relating to the notes, according to the announcement.

The issuer and parent guarantor “will continue to actively engage with creditors to address their liquidity issues consensually and amicably,” the company said.

The company and the guarantor have appointed Guotai Junan International as financial adviser and King & Wood Mallesons as legal advisers to assist them in exploring options in relation to their offshore debt.

Monday’s announcement cited factors including the macroeconomic environment, regulation on the real estate industry and the Covid-19 pandemic in its “unexpected liquidity issues” that have adversely affected the issuer’s ability to service the notes.

A petition for the appointment of joint liquidators over Haimen Zhongnan has been filed with the Eastern Caribbean Supreme Court in the High Court of Justice of the British Virgin Islands in connection with its $7 million of 12% guaranteed senior notes due 2022 guaranteed by the parent. A hearing for the petition is set for Dec. 5, and the issuer and guarantor will vigorously oppose the petition, according to Monday’s announcement.

Trading of the 2024 notes on the Stock Exchange of Hong Kong Ltd. was suspended on Monday and will continue to be suspended until further notice.

The Haimen Zhongnan property development and construction services company is located in the Jiangsu Province of China.

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