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Greentown China defaults on $400 million 9% notes, begins tender offer, seeks waiver
By Angela McDaniels
Tacoma, Wash., April 21 - Greentown China Holdings Ltd. has begun a tender offer and is soliciting consents and waivers for its $400 million 9% senior notes due 2013, according to a company announcement.
The company said an event of default occurred under the indenture when it incurred debt at a time when it was unable to satisfy the fixed charge coverage ratio and/or exceeded the maximum amount of debt allowed.
Greentown said that because of the anticipated delay in the completion of a number of its property projects and the adverse effect of the slowdown in the Chinese property market on its consolidated net profit in 2008, it significantly increased its bank borrowings and borrowings from its subsidiaries in 2008 in order to finance construction and other projects and the working capital requirements for committed projects.
The company is seeking to eliminate or modify substantially all of the restrictive covenants, some events of default and some additional provisions contained in the indenture governing the notes and to waive any defaults or events of default that have occurred or may occur.
Consents are needed from holders of a majority of the notes. Holders who tender their notes will be deemed to have delivered consent.
Holders who tender by 5 p.m. ET on May 4, the consent date, will receive $850 for each $1,000 principal amount of notes - which includes a $775 purchase price, a $59 early tender payment and a $16 consent payment - plus accrued interest.
Holders who tender after the consent date but before 5 p.m. ET on May 19, the offer expiration, will receive the purchase price plus accrued interest.
Holders may deliver consents without tendering their notes but must do so by the consent date. They will receive the consent payment only.
The settlement date is expected to be May 26.
The company plans to fund the offer with internal resources.
The dealer manager is Deutsche Bank AG, London Branch (+44 207 545 8011, +852 2203 8340 or +65 6423 8581), and the information, consent and tender agent is Lucid Issuer Services (+852 2526 5406, Attn: Glenda Chan).
Greentown is a Hangzhou, Zhejiang, China-based residential property developer.
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