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Hong Kong-based developer New World Development has announced plans to reduce about USD 1.3 billion of its debt following an early settlement deadline in its bond exchange offer. The company is swapping a portion of its perpetual bonds and senior notes targeting USD 1.02 billion of perpetuals and USD 29.9 million of senior notes to improve liquidity and avert defaults amid a tough property market. Earlier this year it deferred coupon payments and secured refinancing of over USD 12 billion to shore up its finances. The exchange offer closes on December 2.
Hong Kong-listed real-estate developer New World Development said earlier this week it expects to eliminate around USD 1.3 billion of its debt after bondholders accepted an early settlement in its exchange offer. Most of the reduction comes from perpetual bonds. The company launched an exchange offer of up to USD 1.9 billion this month, aiming to cut one-third of its outstanding perpetual bonds. The early deadline for cash incentives and a smaller haircut ended Monday. Advertisement
The move comes as New World deals with a strained financing environment and weak property market. Earlier this year the firm deferred coupon payments totalling USD 77.2 million on four perpetual bonds due in June. It also arranged a loan refinancing package worth USD 11.24 billion and a separate USD 760 million facility to bolster liquidity.
In its filing, the company said the exchange offers will immediately bring 'significant deleveraging'. It expects to cut USD 1.02 billion of outstanding perpetual bonds and USD 29.9 million of senior notes after early settlement.
Under the plan, part of its USD 4.5 billion outstanding perpetual bonds (with coupons between 4.125% and 6.25%) will be swapped into up to USD 1.6 billion of new perpetual bonds carrying a 9% coupon and subject to a 53% haircut. Bondholders who tendered early by November 17 will receive a 50% haircut and a cash bonus of USD 20 for each USD 1,000 bond.
The company also plans to swap some of its USD 2.3 billion senior notes due 2027-2031 (with coupons between 3.75%-8.625%) into up to USD 300 million of new 7% senior notes maturing in 2031. Haircuts on these notes range from 12% to 32.5%, with improved terms for early participants. The exchange offer will expire on December 2.
In context, New World's financial strain has been public for some time. Back in September the company reported a loss of HKD 16.3 billion (approx. USD 2.09 billion) for the second consecutive year, though it said debt and net debt had declined and cashflow had returned to positive territory. Earlier this year its refinancing of HKD 88.2 billion (approx. USD 11.3 billion) of offshore debt was seen as a lifeline.
Source Reuters
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