Moody's maintains Neo-China Land

Moody's Investors Service said it will maintain Neo-China Land Group (Holdings) Ltd.'s Caa3 corporate family and senior unsecured ratings.

The outlook remains negative.

This follows news that the company has obtained the consent of its bond holders to revise the terms of its convertible bonds, including a reduction of the put price to 63% of face value - from 120% originally - on the forthcoming put date of June 12. The amendment is still subject to approvals.

Moody's said it views this transaction as a distressed exchange, given that a failure to obtain bond holder consent would have likely resulted in a default if investors put the convertible bonds back to Neo-China at the original price.

Although the successful restructuring could mitigate the risk of imminent default, the Caa3 rating continues to reflect Neo-China's exposure to a high risk of default, as it has to meet the next coupon payment on its $400 million bond due in July 2009 and it has short-term loan payables totaling about HK$2 billion, the agency said.

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