Easy Tactic garners tenders of $1.53 billion in offer, gains consents

By Mary-Katherine Stinson

Lexington, Ky., April 5 – Easy Tactic Ltd., a subsidiary of Guangzhou R&F Properties Co., Ltd., reported results of its exchange offer and relaunched consent solicitation for three series of notes.

The following notes were subject to the tender offer and consent solicitation:

• $1,443,307,054 outstanding 6½% cash/7½% PIK senior notes due July 11, 2025 (ISIN: XS2495355674), the tranche A offer;

• $2,460,990,567 outstanding 6½% cash/7½% PIK senior notes due July 11, 2027 (ISIN: XS2495358009), the tranche B offer; and

• $1,793,343,641 outstanding 6½% cash/7½% PIK senior notes due July 11, 2028 (ISIN: XS2495359403), the tranche C offer.

As of the expiration of its two parallel exchange offers at 11 a.m. ET on April 3, notes totaling $1,528,406,807 across the three series were tendered for exchange. This figure includes the $300 million in aggregate principal amount of existing notes from the anchor investor as part of the Anchor Investor Commitment set out in the exchange offer memorandum.

Under the terms of the tranche A and B offer, Easy Tactic will announce the initial capital call amount on the transaction website and determine and separately notify each interim key investor applicant of the steps required to be considered a valid key investor applicant or investor applicant by April 16.

In order for a holder to tender existing notes under the tranche A and B exchange offers, the holder must apply to become either a key investor or an investor.

Under the terms of the tranche C exchange offer, Easy Tactic will allocate the tranche C perpetual bonds through an unmodified Dutch auction procedure. The company will reach out to each holder in relation to their allocations, if any, by April 18.

The notice stated that the decision to accept any exchange of existing notes for the tranche C perpetuals under the tranche C exchange offer is at the sole and absolute discretion of the company and may be rejected at any time.

The offeror commenced the offers to invite eligible noteholders to tender their existing notes for new perpetual instruments issued by London One.

The exchange offers comprise an invitation to eligible noteholders to tender their existing notes for exchange into tranche B1 perpetual bonds, which are expected to be issued in a total principal amount of $400 million, and tranche B2 perpetual bonds, which are expected to be issued in a total principal amount of $400 million, and simultaneously pay a cash consideration to subscribe for tranche A perpetual bonds, which are expected to be issued up to a total principal amount of £820 million, in each case issued by the offeror.

The second, separate invitation was for eligible noteholders to tender their existing notes for exchange into tranche C perpetual bonds issued by London One, which are expected to be issued up to a total principal amount of $200 million.

The tranche B1 and B2 perpetual bonds will be exchanged on a par basis. The consideration for the tranche C bonds will be in the range of $100 to $800 of tranche C bonds per $1,000 of existing notes, with the minimum consideration specified by the noteholder.

The consideration to be paid by London One for the acquisition will primarily comprise at least $800 million of the existing notes, and the purpose of the exchange offers is to acquire sufficient notes to pay proceeds and raise necessary cash proceeds to repay loans of the target, which is expected to require £820 million.

Completion of the exchange offers was conditioned on passing and implementing the extraordinary resolutions under the consent solicitation and the approval of company shareholders, among other things.

Morrow Sodali Ltd. and Kingsway Capital Ltd. are acting as the information agent and the exchange information agent, respectively, and Madison Pacific Trust Ltd. is serving as exchange agent and escrow agent for the exchange offers.

All documents related to the exchange offers are available on the transaction website at https://projects.morrowsodali.com/optimus.

Questions relating to the acknowledgement submission, undertaking and subscription form to participate in the offers should be directed to the information agent at gzrf@investor.morrowsodali.com.

Questions relating to the submission of KYC information and completion of KYC checks should be directed to the exchange agent at mp_kyc@madisonpac.com.

Any other questions should be directed to the exchange information agent through the help desk (+852 3583 5497, +852 3583 5498, +852 3583 5499, Enquiry@2024LondonOne.com).

Consent solicitation

Easy Tactic also announced that the new meetings held on April 5 were quorate and the extraordinary resolution was approved by the requisite majority of noteholders at that meeting, satisfying the consent conditions.

The amendments were executed on April 5 and will become operative on the consummation of the exchange offer and payment of the consent fee.

The consent fee is expected to be made concurrently with consummation of the transaction.

The consent fee has been updated on two occasions. Holders will receive an early consent fee in the form of a cash payment of $5 per $1,000 principal amount of notes if their consents were received by the early deadline and a base consent fee in the form of a cash payment of $2.50 per $1,000 principal amount of the notes if their consents were delivered before the expiration of the offer.

As previously reported, on March 8, Easy Tactic updated the consent solicitation for the three notes, moving from consent solicitations with no fee offered to consenting holders to a payment model. Under that prior amendment, consenting holders would have received $1.00 per $1,000 note.

Easy Tactic retained J.P. Morgan Securities (Asia Pacific) Ltd. to act as the solicitation agent (+852 2800 7632, +852 2800 8006, Liability_Management_GZRF@jpmorgan.com) and Morrow Sodali Ltd. (+44 20 4513 6933; +852 2319 4130 or gzrf@investor.morrowsodali.com) to act as the tabulation and information agent.

Rationale

Under the terms of the London One Loan, R&F One (UK) Ltd., as the borrower, is required to ensure that, on or before the earlier of the project completion date and the first sales milestone date of May 13, the total gross disposal proceeds derived from the specified London assets cannot be less than £240 million. As of March 27, no sales had been made other than sales of affordable housing units, totaling less than £20 million.

The lenders have informed the borrower that they intend to exercise their full rights under the London One loan if the first sales milestone is not reached by the appropriate date. Given the difficulties to satisfy the milestone, the release states that the transaction will help ease liquidity of the group by discharging the London One loan.

A relaunched consent solicitation was conducted to facilitate the transaction.

It was seeking to amend the notes to eliminate restrictive covenants to facilitate the proposed disposal of R&F.

Consent instructions had two voting options: to vote in favor of the consent solicitations and consider participating in the exchange offers and to vote in favor of the consent solicitations only.

The acquisition is expected to close on April 23.

The original consent deadline, now no longer relevant, was 11 a.m. ET on March 18.

Noteholder meetings for each series were to be held on March 21 but were subsequently canceled.

Recap

The exercises relate to a potential sale and substantial disposal of the property of R&F International Real Estate Investment Co. Ltd.

As previously reported, London One signed on Feb. 6 a definitive agreement to acquire R&F International for $800 million, mainly representing the acquisition of the freehold land and buildings more commonly known as Market Towers or One Nine Elms in London.

Previous update

The offeror, London One Ltd., previously updated the terms of the exchange offers, which were originally launched on Feb. 28.

The main changes to the terms of the exchange offer were as follows:

• Increase of the initial capital call amount to £840 million from £820 million and, consequently, modification to the fixed ratio such that for each £2,100 in principal amount of tranche A1 perpetual bonds committed to subscribe for by an eligible holder, such holder is required to (i) tender $1,000 principal amount of existing notes for exchange into $1,000 principal amount of tranche B1 perpetual bonds and (ii) tender $1,000 principal amount of existing notes for exchange into $1,000 principal amount of tranche B2 perpetual bonds, where previously the fixed ratio requirement was tranche A1 £2,050 to tranche B1 $1,000 to tranche B2 $1,000;

• Increase to the loan advanced to the seller for the purpose of funding the costs and expenses for the consent solicitation and the acquisition to $30 million from $5 million;

• Revision to the timetable for the exchange offer;

• Inclusion of an additional provision in the terms and conditions of the perpetual bonds from the offeror to provide updates from time to time on the progress of any disposal or pre-sales of any part or unit forming part of the property, rental or other income derived from the property and a provision that permits the offeror to elect to require the tranche C perpetual bonds to be cleared through the facilities of Euroclear/Clearstream, which will thereafter be held in global registered form by a nominee of a common depositary for the benefit of the relevant accountholders; and

• Other miscellaneous changes.

Easy Tactic is a special purpose vehicle of Guangzhou, China-based real estate developer R&F Properties.

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