Zhenro Properties in an HKEX exchange filing said, “Existing internal resources may be insufficient to address its upcoming debt maturities in March 2022, including the redemption of the Securities in full on 5 March 2022”, confirming market speculation earlier this month and reversing its statement in early January that it would redeem its $200mn Perps on its first call date of March 5. Concurrently, Zhenro has solicited the consent of creditors regarding waivers and amendments with respect to the Perp, offering a consent fee of $10 per $1,000 in principal and a step-up fee of $7.5 per $1,000 in principal. Among the changes proposed are certain modifications to the terms and conditions with respect to the definition of “First Reset Date” and “Change of Control” and removing “Relevant Indebtedness Default Event” from the events that will trigger an increase in the “Distribution Rate”, Zhenro pointed. As per the Perp’s pricing supplement, the distribution rate would be increased by 5% should a relevant indebtedness default event occur. This would be in addition to the 5% step-up over its initial margin, already in effect from January 25 as the property developer has decided against redeeming the bonds on the first call date. The coupon on the Perp has thus increased to 14.724% (3Y UST + initial spread of 8.414% + step up of 5%) from 10.25% earlier.
Zhenro’s 14.724% Perp was down 5.7 points to trade at 18.77 cents on the dollar.
Separately, Ronshine China repurchased $62.473mn of its outstanding 10.5% bonds due March 1, 2022. This comes close on the heels of news that Ronshine hired Guotai Junan Securities as financial adviser and Linklaters as legal adviser for a proposed debt exchange, as per Debtwire.