China's Winsway holders deliver consents for $315.91 million 8½% notes

By Marisa Wong

Madison, Wis., Oct. 9 - Winsway Coking Coal Holdings Ltd. announced that as of 11:59 p.m. ET on Oct. 8, the extended expiration date of the tender offer and consent solicitation for its $460.6 million of outstanding 8½% senior notes due 2016, holders had delivered consents for a total of $315,906,000, or 68.6%, of the 8½% notes.

Because the company received tenders for more than 50% of the outstanding principal amount of 8½% notes, the company will execute a supplemental indenture containing the proposed amendments to eliminate substantially all restrictive covenants and some events of default contained in the original indenture.

Winsway said it has decided to accept for purchase all tendered notes. Settlement is slated for Oct. 11.

Breakdown of tenders

The company received the following tenders under three tendering options:

• $143,997,000, or 31.27% of the total amount of outstanding 8½% notes, under alternative A, which was for holders who intended to tender the entire amount of "alternative A participating notes."

The participating notes are the notes that holders wish to use in the tender offer and consent solicitation.

Under this option, holders will receive a total payment of $450 per $1,000 principal amount of notes. The total payment includes a $25.00 consent payment.

The company will also pay accrued interest;

• $9,588,000, or 2.08% of the outstanding 8½% notes, under alternative B, which was for holders who intended to retain 25% of "alternative B participating notes."

In order to select this option, holders had to (i) notify the tender agent of the amount of alternative B participating notes they wished to tender, (ii) agree to have the entire amount of alternative B participating notes be blocked until the earlier of the settlement date and termination of the offer, (iii) agree to tender 75% of the entire amount of alternative B participating notes and retain ownership of the remaining 25% and (iv) agree to deliver consents for the entire amount of the alternative B participating notes.

The total payment under alternative B is $350 per $1,000 of notes and includes a $25.00 consent payment for notes.

The company will also pay accrued interest; and

• $162,321,000, or 35.25% of the outstanding 8½% notes, under alternative C, which was for holders who wished to deliver consents but not tender their notes.

Under alternative C, holders will receive a consent payment of $25.00 per $1,000 principal amount of notes.

According to a Sept. 25 announcement, alternative C was added after the company failed to receive a sufficient response to allow it to amend the notes under the original terms.

Under the original terms, holders who tendered their notes had to deliver their consents and vice versa.

Early tender results

By the tender deadline of 11:59 p.m. ET on Sept. 23, Winsway had received tenders for $182.1 million of notes, or 39.54% of the total.

That response was up slightly from $165.1 million, or about 35.85%, that was recorded at the early tender deadline of 5 p.m. ET on Sept. 5.

On Sept. 9, Winsway announced the early tender results and amended the offer to extend the expiration until 11:59 p.m. ET on Sept. 23 from 11:59 p.m. ET on Sept. 19. The offer began on Aug. 20 and settlement was originally slated for Sept. 24.

At the same time, the company said that all holders who tender and deliver consents will receive the consent payment of $25.00 for each $1,000 of notes, not just those who tender before the early deadline.

The company also waived the commercial condition to the tender offer that required tenders of at least 75% of the outstanding notes, according to a prior press release.

The company said the purpose of the offer is to reduce its overall debt and future interest expense and to improve its financial position.

Deutsche Bank AG, Singapore Branch (44 20 7545 8011, +65 6423 5342, attn.: liability management group, liability.management@db.com) was the dealer manager for the tender offer and consent solicitation. Lucid Issuer Services Ltd. (44 20 7704 0880, attn.: David Shilson, winsway@lucid-is.com) was the tender and information agent.

The company issued $500 million of the 8½% notes in April 2011. The current outstanding principal amount excludes the $39.5 million held by the company and its affiliates.

Winsway is a Hong Kong-based importer of coking coal, particularly from Mongolia.

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