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China Energy Reserve taken to court over payments due on bonds
By Marisa Wong
Los Angeles, Sept. 30 – China Energy Reserve and Chemicals Group Co. Ltd. notified its bondholders that the bond trustee has begun legal proceedings against the company with respect to all amounts due and payable under the $350 million of 5¼% bonds due 2018 issued by China Energy Reserve and Chemicals Group Overseas Capital Co. Ltd. (CERCG Overseas).
The $350 million of bonds consist of $200 million of bonds issued on May 11, 2015 and an additional $150 million issued on May 29, 2015.
Trustee Bank of Communications Trustee Ltd. began legal proceedings in the High Court of Hong Kong on Sept. 21 against China Energy Reserve and CERCG Overseas and has sent a statutory demand with respect to the 5¼% bonds to China Energy Reserve.
Holders of the $400 million 6 1/8% bonds due 2019 and $265 million 6¼% bonds due 2019 issued by China Energy Reserve and Chemicals Group International Co. Ltd. were notified on Wednesday of the enforcement action relating to the 5¼% bonds. China Energy Reserve is the keepwell provider for the 6 1/8% bonds and the guarantor for the 6¼% bonds.
China Energy Reserve said it is taking legal advice in connection with the proceedings for the 5¼% bonds and will contest the issue of the statutory demand.
The company also said it continues to face financial and operating difficulties due to the coronavirus pandemic and depressed international oil and gas prices.
The company is still in discussions with various parties over a consensual restructuring of its debt and is considering a further revision of its restructuring proposal to bondholders given the ongoing legal proceedings and feedback received from bondholders.
In the meantime, all interest payments and principal payments on the outstanding bonds continue to be suspended until further notice.
The energy development company is based in Beijing.
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