R&F Properties has sought to extend the maturity date of its outstanding $725mn 5.75% bonds due January 13, 2022 by six months via a consent solicitation and cash tender offer. The bonds were issued by Easy Tactic and the consent solicitation with bondholders is regarding extending the maturity and allowing it to redeem the bonds prior to the new maturity date of July 13, 2022 in whole or in part at par. The tender offer has two options:

  • Option A: Bondholders will receive $830 plus accrued interest for every $1,000 in principal
  • Option B: Bondholders will receive $1,000 plus accrued interest, but R&F Properties will only accept 50% of the offers made under option B

R&F may set a maximum acceptance amount for option A and/or B, to be announced prior to the tendering of the bonds and the voting deadline of January 4, 2022. Bondholders who choose either option A or B will be deemed to have supported the consent solicitation, whether or not their tenders are accepted. The developer also warned that if the above liability management exercise fails, it “may not be able to fully redeem the notes upon maturity” on January 13, 2022.

S&P downgraded R&F Properties to CC from B- due to the above, calling it a Distressed Debt Exchange (DDE). Upon completion of the transaction, S&P said that it would likely assess it as tantamount to a default. S&P believes R&F does not currently have the offshore funds fully ready yet for the imminent bond maturity and has less than one month left to prepare funds for repayment. R&F still has large onshore bond maturing and puttable of ~RMB 9.5bn ($1.5bn) plus offshore maturities of $648mn in the rest of 2022 apart from the $725mn 5.75% 2022s. R&F’s November sales fell ~45% YoY and will likely remain weak with its capacity to make repayments with internal resources likely to be constrained.

R&F Properties’ dollar bonds are lower with its 9.125% 2022s down 5.55 points to 45.58 cents on the dollar.

For the exchange filing, click here; For the rating action, click here

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