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China South City warned bondholders that it did not have enough resources to pay the interest on its 9% dollar bonds due July 2024 falling on/prior to 20 December 2023. It cited liquidity and cashflow constraints, according to an exchange filing. The company had extended the deadline for the consent solicitation exercise on its five dollar bonds due in 2024 to December 18. As of the date of announcement, holders of 69.8% of the aggregate outstanding principal amount of the notes had voted in favor of the consent solicitation. This was lower than minimum 75% that they required to successfully complete the exercise. Earlier this month, under the terms of consent, the company agreed to a mandatory redemption of 4% of the aggregate principal of all five notes on 31 January 2024. With regard to trying to honor its payments, the company said that it was in continued discussions with state-owned Shenzhen SEZ Construction and Development Group Co (SZCGD). In January 2022, SZCGD made an equity investment of HKD 1.9bn ($245mn) in China South City to become its largest shareholder and effectively, bailing out the company.
Its 9% bonds due June 2024 are trading at distressed levels of 24.8 cents on the dollar.