Sun 11/01/2020 22:22 PM
Share this article:
From Reorg Asia’s Managing Editors

In this column, managing editors Stephen Aldred and Shasha Dai will take turns writing about trends in high yield, distressed debt, restructuring and bankruptcy in major Asian markets including China, Southeast Asia, India and Australia. For questions or comments, contact Stephen at and Shasha at Send your people and fund news to Continue reading for the Asia Core Credit bi-weekly covering developing high-yield, distressed debt and restructuring situations in the region, and request a trial to access our coverage of thousands of other financial restructurings.

M&A and leveraged finance markets are back in risk-on mode globally.

In Asia Pacific, the Australian markets – which in recent years have provided a flow of high-yield unitranche, TLB and syndicated leveraged loans – have seen a marked uptick in activity.

According to a leveraged and acquisition finance commentary from Credit Suisse Australia last week, M&A deal activity includes Infratil/Morrisons acquisition of a majority stake in Qscan from Quadrant for around A$330 million ($232 million), Pacific Equity Partners and Carlyle Group gaining access to conduct due diligence on a proposed A$3.5 billion take private of Link Group – expected to be backed by around 50% leveraged debt, according to sources; Ares closing in on a reported A$5 billion takeover of AMP Capital; and Elliott Management taking 50% of Thiess, the world’s largest mining services company, for A$1.8 billion.

But issues remain, as Credit Suisse also notes in its commentary.

Second and third waves of Covid-19 could still have an impact, and Northern European countries are now entering a further lockdown. Britain’s long-running attempt to Brexit is yet to reach a conclusion. And while hopes are for a clear result in the US elections, concerns are that a close race could end up in a drawn-out dispute, as happened in 2000.

While some argue that lenders are overlooking EBITDAC – the Covid impact on earnings – and focusing more on liquidity, run rate earnings and green shoots, while focusing on sectors that have proved resistant to Covid-19, others remain cautious, suggesting that playing down the impact of Covid-19 on earnings is only an element where there is a core corporate relationships.

Perhaps more pointedly for M&A, sources point to growing localisation of deal-making, amid rising nationalism and inevitable calls for home industry protection amid Covid-19.
In that regard, an overlooked but critical factor for private equity buyers in Asia is potential increased scrutiny by the Committee on Foreign Investment in the United States (CFIUS) looking for ties to the Chinese government even within portfolios before approving deals.

As Reorg reported in September, citing CFIUS practitioners, this is now particularly true for funds domiciled in Hong Kong following a U.S. executive order eliminating the United States’ differential treatment in various respects between Hong Kong and mainland China.

Multiple international, pan-Asian and Chinese private equity firms are headquartered in Hong Kong – the Hong Kong Venture Capital Association’s (HKVCA) 480 members include 280 private equity firms across all types, according to its website, managing a total of $2 trillion in assets. Private equity is attracted to Hong Kong’s uncomplicated tax structures and financial infrastructure, the HKVCA notes.

In the case of Baring Private Equity Asia’s (BPEA) $2 billion bid for Virtusa (VRTU), which Reorg examined, CFIUS is likely to examine BPEA’s stakes in companies with Chinese government ties. CFIUS could view its minority stakes in companies like COFCO Meat Holdings or China Shengmu Organic Milk and Rich Healthcare as leverage the PRC could use to compel BPEA to share sensitive products or information, as Reorg reported.

If CFIUS concludes that BPEA has direct or indirect ties to the Chinese government, the nature of Virtusa’s IT services may warrant extended scrutiny on the committee’s part, as Reorg reported. The company provides information technology solutions and cybersecurity services to U.S. companies in media, telecom, technology, banking and financial services sectors.

The idea of blocking Hong Kong-headquartered BPEA – a global player, and one of Asia’s most successful home-grown funds – on the grounds of potential influence of minority stakes held in its China portfolio may seem bizarre to players in Asia.

But Covid-19 is only likely to accentuate an already established trend.

To see that trend, you need look no further back than Canyon Bridge Capital’s attempted $1.3 billion acquisition of Portland, Oregon-based microchip maker Lattice Semiconductor in 2017. President Trump issued an executive order blocking that deal after intense regulatory scrutiny, following reports that Canyon Bridge was funded partly by China’s central government, and had indirect ties to the country’s space program.

BPEA’s acquisition of VRTU is pending CFIUS approval.

M&A markets are risk on, but issues remain.

--Stephen Aldred, Managing Editor - Asia

From Our Financial & Legal Analysts
Below are links to reports written this week by our financial and legal analysts.

Reorg Asia Watchlist


Altura Mining

Altura Mining appointed voluntary administrators, Cor Cordis, who have scheduled the first meeting of creditors for Thursday, Nov. 5 as the company remains committed to a recapitalisations plan. The meeting comes as Altura’s senior loan note holders CarVal, CastleLake, Clearwater and Nomura appointed KordaMentha as receivers and managers, and entered an implementation agreement with Pilbara Minerals Ltd. The noteholders have agreed to vote in favour of the Pilbara Minerals sponsored Deed of Company Arrangement (DOCA) for Altura Lithium Operations (ALO) through the purchase of shares for approximately $175 million, should the acquisition proceed.

See Reorg’s coverage of Altura Mining HERE.

Seek Ltd.

Australian headquartered online jobs site Seek Ltd.’s A$225 million ($158 million) three-month BBSW+ 3.7% senior unsecured due 2026 notes were indicated flat at around 95/96 on Oct. 29, despite a report on the same day from activist investor Blue Orca Capital, which alleged that the company’s 61%-owned Chinese online recruiting platform Zhaopin was “inundated with fake postings”, and that dividend payments “have been largely funded by debt”.

See Reorg’s coverage of Seek HERE.

Glencore Plc

Glencore Plc cancelled its planned seven-year A$ MTN issue on Oct. 22 after mandating Mizuho Securities, National Australia Bank (NAB) and Commonwealth Bank of Australia (CBA) as joint lead managers and bookrunners to arrange a seven-year or longer senior unsecured A$ MTN issue. Glencore’s issue cancellation followed both Perenti Global and Dalrymple Bay Coal Terminal (DBCT) pulling A$ MTNs in mid-September.

See Reorg’s coverage of Glencore HERE.


Zhongrong Xinda Group

Holders of Zhongrong Xinda Group’s $500 million 7.25% senior notes due Oct. 26 have yet to receive the repayment as of Oct. 28.

See Reorg’s coverage of Zhongrong Xinda HERE.

Anton Oilfield Services Group

Anton Oilfield has engaged Admiralty Harbour to buy back its $300 million 9.75% senior notes due Dec. 5, 2020 from the secondary market.

See Reorg’s coverage of Anton Oilfield HERE.

Peking University Founder Group Company Limited

A consortium led by Zhuhai Huafa Group and another consortium led by Taikang Life Insurance have been shortlisted to the final round of strategic investor selection in the consolidated bankruptcy restructuring of Peking University Founder Group and four other subsidiaries, the bankruptcy administrator said during the first creditors' meeting on Oct. 22.

See Reorg’s coverage of PKU Founder HERE.

Tsinghua Unigroup

Tsinghua Unigroup’s onshore and offshore bonds already plummeted across the curve on Oct. 30 after it told investors that it has dropped a plan to call its RMB 1 billion 6.5% private perpetual notes on the same day (15 Unigroup PPN006) despite having repeatedly assured investors that it would do so.

See Reorg’s coverage of Tsinghua Unigroup HERE.

Shandong Ruyi Technology Group Co.

Shandong Ruyi Technology Group plans to further defer the RMB 75 million ($11.2 million) coupon payment due Dec. 15 to a yet-to-be-determined date under its RMB 1 billion 7.5% medium term notes due 2022 “19 RuyiTech MTN001”

See Reorg’s coverage of Ruyi HERE.


Future Retail Ltd.

Future Group lenders are expected to appoint Alvarez & Marsal as the restructuring advisor for a one-time restructuring. Earlier, Future Group had appointed EY India as advisor for the proposed one-time resolution of its debt under the Reserve Bank of India’s Aug. 6 Covid-19 resolution framework.

Read Reorg’s coverage of Future Retail HERE.

Kesoram Industries Ltd.

Goldman Sachs and Edelweiss Group are nearing a close on providing private financing of INR 16 billion ($218.6 million) to Kesoram Industries Ltd. that would be used to settle debt with the company’s lenders and provide working capital. Kesoram has also been in talks with Farallon Capital for the funds, but the Goldman Sachs/Edelweiss financing offers a lower coupon of around 16% and currently expected to be preferred.

Read Reorg’s coverage of Kesoram Industries Ltd. HERE.


Alam Sutera Realty Tbk

PT Alam Sutera Realty Tbk’s exchange offer saw 86.10% of the notes due 2021 and 87.41% of the notes due 2022 tender before the exchange expiry on Oct. 26, meeting the minimum requirement of 85% acceptance threshold.

Read Reorg’s coverage on Alam Sutera HERE.

Pan Brothers Tbk

PT Pan Brothers Tbk, with regard to the refinancing progress of its $138.5 million existing syndicated loan that is due to mature on Feb. 1, 2021, said that while one of its existing lenders is willing to increase its refinancing participation size by ~20%, the company would be able to raise $100 million “at a minimum” as part of its refinancing exercise.

Read Reorg’s coverage on Pan Brothers HERE.

Fundraising and People Move News
Send your people and fund news to

Alvarez & Marsal on Oct. 28 announced it had hired Joshua Taylor and Steffi Thio as managing director and senior director, respectively, both based in Singapore and the first senior hires for A&M’s restructuring and turnaround practice in Southeast Asia.
Taylor has expertise in insolvency and debt restructuring in Asia, Australia and the Caymans, and before joining A&M he was a senior managing director at FTI Consulting in Singapore. Thio has over two decades of experience in building and managing performing and non-performing credit portfolios for banks and financial institutions in Asia, and before joining A&M she held credit risk management roles at Standard Chartered Bank and HSBC, according to the announcement.

ANZ announced on Oct. 19 that John Corrin had been appointed Head of Corporate Finance, International, a newly-established role overseeing the bank’s corporate financing business outside Australia and New Zealand. Corrin jointly reports to Christina Tonkin, managing director, Corporate Finance and Farhan Faruqui, Group Executive, International. Corrin was previously Head of Loan Syndications for ANZ’s International business. He remains based in Hong Kong. Corporate Finance is a newly-created unit which includes sustainable finance, asset finance, leveraged finance, project finance, export finance, loan syndications and corporate advisory as well as resources, energy and infrastructure relationship teams.

FTI Consulting on Oct. 28 said it has appointed Maria Wu as a managing director of the business transformation practice within the Corporate Finance & Restructuring segment in Beijing. Before joining FTI Consulting, Wu was a partner at Ernst & Young and was the Consulting Director of People & Change at PricewaterhouseCoopers. She has led complex, large-scale change initiatives that include post deal HR integration & communication strategy, workforce downsizing management and strategic talent development planning, according to the announcement.

Edelweiss Alternative Asset Advisors on Oct. 19 announced final close of its $900 million seven-year closed-end alternative investment fund ESOF III. The third Edelweiss Special Opportunities Fund, ESOF III has a mandate to invest in performing credits and provide structured credit to Indian companies. Investors include Canadian Ontario Teachers’ Pension Plan Board, Florida’s State Board of Administration and Swedish pension fund AP4. On an investor call, Hemant Daga, president and head of Edelweiss Asset Management said the fund targets a return of 16% to 18%, and will provide long-term capital for growth through private credit.

KKR on Oct. 30 announced the launch of Virescent Infrastructure, a newly created platform to acquire renewable energy assets in India. Facilitated by investments predominantly made through KKR’s infrastructure fund, Virescent looks to identify investment opportunities that have stable cash flows stemming from long-term contracts with state and central government counterparties across India, according to the announcement.

California-based private equity and credit investment giant Ares Management is in talks to buy embattled Australian wealth manager AMP, according to a report in the Australian Financial Review. According to the report, Ares made an indicative offer to acquire AMP in full, and has access to a data room and due diligence materials.

India focused venture capital firm SAIF Partners has rebranded as Elevation Capital and closed a seventh fund at $400 million, according to reports in Indian media.

Week Ahead
Below is a list of events on the Reorg Asia Calendar for the next two weeks





For questions and comments about our content, please contact For inquiries about trial or subscription, please contact
Share this article:
This article is an example of the content you may receive if you subscribe to a product of Reorg Research, Inc. or one of its affiliates (collectively, “Reorg”). The information contained herein should not be construed as legal, investment, accounting or other professional services advice on any subject. Reorg, its affiliates, officers, directors, partners and employees expressly disclaim all liability in respect to actions taken or not taken based on any or all the contents of this publication. Copyright © 2024 Reorg Research, Inc. All rights reserved.
Thank you for signing up
for Weekly Insights!