In this column, Reorg editors and reporters take turns writing about trends in high yield, distressed debt, restructuring and bankruptcy in major Asian markets including China, South Asia and Southeast Asia. Any opinions or other views expressed in this column are the author's own and do not necessarily reflect the opinions or views of Reorg or its owners. Send any question or concern you may have to firstname.lastname@example.org.
What is obvious about global logistics and warehousing company GLP is that the disclosure of the identity of its incoming investor will lift the bonds. The company has guided as much to investors. You can run all manner of shortlists on the name to identify potential investors and will likely generate an A-list of Chinese private equity power players, insurers, logistics companies, sovereign wealth funds and banks.
But the bonds of the company which fell on no news in October remain stubbornly at distressed levels.
GLP China Holdings’ $700 million 2.95% due 2026 bond was indicated at 66/68 today, Nov. 30, and the GLP China Holdings’ $500 million 4.974% due 2024 was indicated at 80/83. The GLP Singapore 3.875% due 2025 were indicated at 74/77.
As of Oct. 7, the Friday prior to the collapse of its bond prices, the 2.95% due 2026 bond was indicated at 76/77, the 4.974% due 2024s were indicated at 91/92, and the 3.875% due 2025s had been indicated at 84/85, as reported
The fundamental problem for investors in the bonds of GLP, China’s largest warehouse operator, is its opacity, or to put it more bluntly, the company is seen as having a bit of an attitude problem when it comes to disclosure.
In a market where sudden price slides have been precursors to defaults, GLP’s bonds got sucked into a downdraft created by its own silence. The lack of subsequent disclosures has kept its bonds down.
The October news cycle is well documented, but it’s worth running over one more time for what it discloses about market sentiment, and regardless of the runup in Chinese real estate high-yield bonds
in recent weeks, on the back of a slew of announcements offering financial support to the sector, the market is still underpinned by an essential fragility.
In this market, offshore noteholders’ primary concern is arguably whether they will ultimately get their money back.
GLP’s bonds plunged dramatically following a series of investor calls on Oct. 10 and Oct. 11, during which it was disclosed that receivables had increased by around $2.6 billion, bringing the total to around $6.7 billion at the end of June this year. While some explanation
was provided to investors – including that some of it was in relation to financing of a fund and some in relation to the incoming investor – the company declined to give detailed information, adding to overall nervousness.
Investors perhaps shouldn’t be so surprised at GLP’s lack of disclosure on its ballooning receivables, or its incoming investor.
It has some notoriously private investors, who also happen to be power players in China, of the kind essential to supporting GLP’s business model of securing land parcels to develop state-of-the-art warehousing and logistics facilities.
Those investors include HOPU Investment and Hillhouse Capital, part of the consortium that acquired the company for SGD 16 billion in 2018, taking it private from the Singapore Exchange. Other members of that consortium included Bank of China Group Investment, Vanke Real Estate Hong Kong and SMG Eastern, an investment vehicle of GLP’s then-CEO Ming Mei.
Boyu Capital, whose co-founders include former Chinese president Jiang Zemin’s grandson Alvin Jiang, also joined the second $875 million tranche of a $2.5 billion two-tranche 2014 investment into GLP China. Strategic investors who joined that second tranche included China Life Insurance, China Development Bank China, China Post Insurance and Bank of China International-owned China Infrastructure Partners.
The original 2014 investment into China GLP came at a time when private equity and strategic investors were in a deal-making frenzy in relation to China logistics. GLP itself had publicly estimated that if $2.5 trillion were invested over the following 15 years, it would only increase per capita fully automated warehouse space to one-third of that in the U.S.
The first $1.6 billion tranche of the 2014 deal which saw HOPU Funds investing into the China Holdco, gave employees the opportunity to buy shares in the unit. Mei bought shares valued at around $51 million at that time, according to media reports, financed with a loan from the HOPU investor group.
The point of all this is that the information on the 2014 investments and the 2018 buyout investors was revealed in public disclosure.
What irks bond investors now is not that deals are being executed, or even that the execution is slow. What dragged GLP into a downdraft of its own creation in early October is that the now unlisted company is comfortable taking public money in the form of bonds but does not feel the need to be more public with its disclosure.
That attitude potentially represents a corporate governance concern.
–Stephen Aldred, Managing Editor, AsiaFrom Our Financial & Legal AnalystsBelow are links to recent reports written by our financial and legal analysts:Bankruptcy Industry Update
Reorg’s legal analysis
explores the new Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by Courts of the Mainland and Hong Kong which has come closer to implementation. The removal of the strict exclusive jurisdiction requirement should allow for asymmetric jurisdiction clauses in finance documents and combined with the wider application, once in force, the new arrangement may be positive for creditor recovery involving debtors with a significant Mainland nexus.Reorg Asia Watchlist AUSTRALIA North Queensland Export Terminal Pty Ltd.
Adani Group sent a swift rebuttal to investors for S&P’s downgrade to ‘B-’ from ‘BB-’ of North Queensland Export Terminal’s $500 million 4.45% due notes due Dec 15, on the rating agency’s concerns of “heightened refinancing risk”. Adani, in a response seen by Reorg, said that commitment towards funding the refinancing of the upcoming bond maturity was evident in the statement of accounts for one of the private companies of the shareholders, and that evidence was submitted to S&P.
Read Reorg’s coverage of North Queensland Export Terminal HERE
Australian steel products company Infrabuild Australia Pty Ltd. reported its first quarter financial year 2023 results in a post to its website on Nov. 17, showing net revenue for the period had increased 2% to AUD 1.529 billion ($1.026 billion) year on year, while EBITDA was up 24% to AUD 197 million.
Reorg’s coverage of Infrabuild is HERE
Global oncology services provider GenesisCare has received approaches from ‘high quality’ prospective investors offering to provide fresh capital, management told lenders on a call earlier this month. It provided no details on what form any new money would take.
Reorg’s coverage of GenesisCare is HERE
.CHINA China Real Estate
Since the second week of November, the Chinese government has released a slew of new policies and initiatives aimed at expanding access to financing for privately-held real estate developers, including the expansion of the so-called “Second Arrow” program to provide up to RMB 250 billion total financing support and 16 measures from the central bank and China Banking and Insurance Regulatory Commission.
Read Reorg’s coverage of China Real Estate HERE
This developer has told certain investors that it is in talks to sell preferred shares to state-owned enterprises as part of the regulators’ “Third Arrow” financing program. Investors have expressed concern that the discussions appeared to be preliminary and that it’s unclear when or whether a deal may materialize.
Read Reorg’s coverage of CIFI HERE
This real estate developer has provided a preliminary restructuring plan of onshore debt, proposing to extend matured bonds to 2026 and bonds that have yet to mature to 2027. It will start making quarterly principal repayments starting 2025 and deferring interest payment.
Read Reorg’s coverage of Sunac China HERE
On a call with bondholders, Kobre & Kim, advisor to an ad hoc group of noteholders, held with the holders and reported that the group said it will reject the company’s proposed exchange offer and is committed to blocking any scheme of arrangement. The group represents well in excess of a 25% blocking position, the advisor said.
Read Reorg’s coverage of Dexin China HERE
The company’s bonds rallied following news of lines of credit from Postal Savings Bank and ICBC. These are the latest bank-developer partnerships aimed at providing financing for cash-strapped real estate companies, following similar agreements between other state-owned banks and developers including Longfor Group, China Vanke and Gemdale Group.
Read Reorg’s coverage of Country Garden HERE
.SOUTH ASIA Adani Green Energy
Adani Green Energy Ltd’s management has informed select investors that the company not only intends to offer a partial credit guarantee from TotalEnergies SE for its planned $1 billion green bond, but plans a similar guarantee for bonds it would issue to refinance its USD notes maturing in 2024.
Read Reorg’s coverage on Adani Green Energy HERE
Adani Cements Ltd., which acquired Holcim Ltd.’s stake in ACC Ltd. and Ambuja Cements Ltd. backed by $4.5 billion debt in September 2022, is in early talks to refinance $3.5 billion debt through a longer term loan. The cement company of Adani Group, now the second largest in India, is targeting raising the funds by mid-December, and has begun talks with banks, though it is yet to mandate the arrangers officially.
Read Reorg’s coverage on Adani Group HERE
.Srei Infrastructure Finance
The consolidated committee of creditors, or CoC, of Srei Infrastructure Finance and Srei Equipment Finance are likely to meet today, Nov. 25, to vote on the extension of the final submission date for resolution plans by prospective resolution applicants, to Dec. 2 from Nov. 25. The bank lenders at the meeting held on Thursday Nov. 24, gave in-principle approval to extend the deadline.
Read Reorg’s coverage on Srei Infrastructure Finance HERE
Sanghi Industries Ltd. plans to raise up to INR 5 billion ($61.3 million) from Kotak Special Situations Fund through an issue of unrated, unlisted, secured, non-convertible debentures (NCDs).
Read Reorg’s coverage on Sanghi Industries HERE
ReNew Power is looking to raise $350 million through a syndicated loan to fund capital expenditure. The company has mandated Standard Chartered Bank as the sole arranger for the loan, which will be secured against assets of a project under construction.
Read Reorg’s coverage on ReNew Power HERE
Catalyst Trusteeship Ltd., the debenture trustee of Sadbhav Infrastructure Project Ltd., in which Sadbhav Engineering holds a 69.76% stake, on Nov. 2, issued a notice of an event of default under Sadbhav Infrastructure’s INR 5.001 billion ($61.2 million) 11.5% due 2025 secured non-convertible debentures (NCDs) had occurred.
Read Reorg’s coverage on Sadbhav Engineering HERE
.SOUTHEAST ASIA No Va Land Investment Corporation
No Va Land Investment Corporation, as issuer of $300 million 5.25% convertible bonds due 2026 of Vietnamese property developer Novaland Group, issued a statement on Nov. 22, after the convertible bonds fell around 36 points from early November, and its shares lost 66% of value over the last month to make it one of the worst performers on the Ho Chi Minh Stock Exchange. The decline in bond and share prices came after a slew of media reports earlier this month suggested variously that Novaland had laid off half its workforce, and was involved in a fire sale of assets due to constrained liquidity.
Read Reorg’s coverage on No Va Land Investment HERE
.Kawasan Industri Jababeka
Indonesian real estate developer PT Kawasan Industri Jababeka Tbk (Jababeka) has updated terms of its exchange offer for its $300 million 6.5% due 2023 guaranteed senior notes, issued by subsidiary Jababeka International B.V., (old notes) to be exchanged for new guaranteed due 2027 senior notes to be issued by Jababeka and guaranteed by various subsidiaries (new notes), according to an exchange offer document seen by Reorg.
Read Reorg’s coverage on Jababeka HERE
Indonesian energy conglomerate PT ABM Investama Tbk (ABMM) announced to the Singapore exchange on Nov. 21 the expiration deadline on Nov. 17 of the previously announced tender offer for its $200 million 9.5% senior notes due 2026.
Read Reorg’s coverage on ABM Investama HEREAdaro Energy
Indonesia coal miner PT Adaro Energy Indonesia Tbk announced on Nov. 17, that its wholly-owned subsidiary PT Adaro Power in a consortium with Total Eren S.A, signed a letter of intent with state-owned electricity company PT Perusahaan Listrik Negara under which the consortium will be the private power plant project developer for the 70 megawatt (MW) Tanah Laut Wind Power Plant with a 10 MW battery energy storage system.
Read Reorg’s coverage on Adaro Energy HERE
.Fundraising & People MovesESR Group Ltd. announced
Nov. 21 that its wholly-owned subsidiary, ARA, has entered into a partnership with the Export–Import Bank of China for the closing of a $1 billion infrastructure fund – China-ASEAN Investment Cooperation Fund[ II (CAF II). ARA Private Fund's infrastructure arm, ARA Infrastructure, has also been appointed as investment adviser by the Export-Import Bank of China, the main anchor sponsor of the fund. EXIM China, Gezhouba Group Overseas Investment Corporation, China Road & Bridge Corporation and ARA have together committed $1 billion to CAF II. The fund will invest in ASEAN countries across various infrastructure, energy resources including renewables, and ICT sub-sectors, with a strong focus on sustainability and ESG standards.Week AheadBelow is a list of events on the Reorg Asia Calendar for the next two weeks: