Munsun Capital seeks to amend, extend 7.25% convertibles due 2019

By Sarah Lizee

Olympia, Wash., July 10 – Munsun Capital Group Ltd., formerly known as China Precious Metal Resources Holdings Co., Ltd., is soliciting consents to amend its 7.25% convertible bonds due Aug. 4, 2019.

The company is asking bondholders to agree to the proposed amendments through a written resolution, according to a company announcement. The written resolution would then be subject to shareholders’ approval.

Currently, the convertible bonds are due and payable in full with accrued interest on Aug. 4, and the total payment would amount to about HK$329 million.

The company said that in view of tight cash and bank balances, it is expected that it would be difficult for the company to fulfill its obligations in full on Aug. 4.

The company is proposing the following amendments:

• Extending the maturity of the convertibles to Sept. 30, 2021;

• Amending the interest rate to 8% per annum and the interest payment date to March 31 and Sept. 30 each year;

• Amending the conversion price to HK$0.088;

• Addition of a downward-only reset to the conversion price; and

• Addition of the partial redemption right which will be exercisable within the stipulated time periods at the option of the bondholder.

If the new proposals aren’t implemented, a grace period is not granted, or the company fails to pay the redemption amount, there may be an event of default under the bonds, which may in turn trigger the cross-default of other bank and/or other borrowings of the group.

Apart from the new proposals, the company is also exploring and considering other alternatives to ensure that its obligations under the convertibles can be fulfilled, such as other debt or equity financing, subject to the financial performance and conditions of the company and the then market conditions. However, as of the date of the announcement, no concrete plan was concluded, the company said.

The Hong Kong-based precious metals mining and investment holding company sold HK$1,028,000,000 of the bonds in January 2013.

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