Helenbergh China offers to swap 2023 notes for new 2024 notes, cash

By Marisa Wong

Los Angeles, Oct. 25 – Helenbergh China Holdings Ltd. announced an offer to exchange its outstanding $350 million of 11% senior notes due March 24, 2023 (ISIN: XS2297841962) for new notes and cash.

The minimum acceptance amount is $315 million, or 90% of the outstanding principal amount of the existing notes.

The company is offering for each $1,000 principal amount of existing notes an exchange consideration consisting of $1,000 principal amount of new notes and an incentive cash consideration of $2.50, along with capitalized interest.

The new notes will mature on Nov. 3, 2024 and will bear interest at 8%.

The offer expires at 5 a.m. ET on Oct. 31.

Results will be announced on Nov. 1.

Settlement expected to occur on Nov. 3.

Haitong International Securities Co. Ltd. (+852 2973 6741; attn.: debt capital markets) is dealer manager for the exchange offer.

Morrow Sodali Ltd. (+44 20 4513 6933; +852 2319 4130; helenbergh@investor.morrowsodali.com; https://projects.morrowsodali.com/ helenberghexchange) is information and exchange agent.

Background

The company said that while it anticipates the real estate sector will remain under pressure in 2023, it is “committed to mitigating the effects of the recent adverse market conditions and is striving to meet its financial commitments by prudently utilizing its existing financial resources.”

However, despite these efforts, the company has not paid the interest due on Sept. 24 under the existing notes due March 2023 or the interest due on Oct. 8 under its 11% senior notes due Oct. 8, 2023.

On Oct. 19, the company launched a consent solicitation for the October 2023 notes to waive any default or event of default under the October 2023 notes that had arisen as a result of the March 2023 notes non-payment event and to amend the events of default provision in the indenture governing the October 2023 notes so that any future default or event of default under the existing March 2023 notes would not constitute a default or event of default under the October 2023 notes.

In light of the non-payment events under the two series of 2023 notes, the company is considering various liability management options, including the Oct. 19 consent solicitation for the October 2023 notes, the current exchange offer for the March 2023 notes and further consent solicitations with respect to the October 2023 notes.

The purpose of the exchange offer is to extend the group’s debt maturity profile and ease its liquidity pressure.

If the exchange offer is successfully consummated, it may improve the financial condition of the company, extend its debt maturity profile, improve its cash flow, better fulfill its project delivery obligations and enhance the ability to satisfy the group’s debt obligations.

In the meantime, if this exchange is not successfully consummated, the event of default under the existing March 2023 notes resulting from the non-payment event (which will occur after the grace period for the non-payment expires on Oct. 24) could result in the acceleration of the existing notes and an event of default under the October 2023 notes.

In addition, if the consent solicitation is not consummated, the event of default under the March 2023 notes resulting from the non-payment event could also result in an event of default under the October 2023 notes.

As a result, the company may have to consider alternative debt restructuring exercises.

The exchange offer is subject to some conditions. However, the company noted that the ongoing consent solicitation and the exchange offer are not interconditional.

The property developer is based in Guangzhou, China.

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