Corporate Debt Restructuring Masterclass

18 July 2022 (Mon), 5pm Singapore/HK time

Tianqi Lithium, one of the world’s largest producers of lithium chemicals used in electric vehicle batteries said that an unnamed entity would invest up to CNY 16bn ($2.5bn) in its controlling shareholder. This would help the Chinese company reduce its debt. This comes after Tianqi in December got a $1.4bn lifeline from Aussie Miner IGO. The company said that on December 22, it signed a “non-binding and non-exclusive memorandum” on a potential equity transfer with a party that plans to invest CNY 10-16bn in Chengdu Tianqi Industry Group, Tianqi Lithium’s controlling shareholder that has a 30% stake. The Shenzhen exchange had called for an explanation on why Tianqi announced a CNY 15.9bn ($2.3bn) private placement of shares to Chengdu on January 15, only to cancel it two days later. This had brought in speculation that Tianqi was due to bring a strategic investor. Daiwa Capital Markets said that it was almost impossible for Tianqi to afford such an investment alone and that a strategic investment in its controlling shareholder was more likely. The Lithium miner has CNY 1.295bn ($200mn) in cash with short-term debt due within a year at CNY 3bn ($456mn) and long term debt at CNY 15bn ($2.2bn), as per its September report. Moody’s downgraded Tianqi Lithium to Caa2 after it signed a loan extension agreement with its banks for a $1.9bn term loan facility due November 29 – this constituted a default as per Moody’s definition. Ever since, Tianqi’s $300mn 3.75% dollar bonds due 2022 which were down 40% until December last year to distressed levels of 39.05, have more than doubled, currently trading at 87, yielding 11.9% on the secondary markets.

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