Chinese Borrowers Hidden Liabilities Loom Large

Chinese Borrowers Hidden Liabilities Loom Large

Staggering amounts of maturing debt owed by Chinese borrowers are common headlines for generalist newswires. But those numbers do not include off-balance-sheet borrowings and other liabilities, which increasingly exasperate investors, and increase volatility in Chinese issuers’ bonds. Yuzhou Group recently sounded out market interest in a third private bond deal in recent months. As Reorg revealed, the last private issue - a $100 million 6% 361-day issue priced at 98.12% in September - was marketed with an ISIN code and a private page on Bloomberg. The issuer was a BVI-incorporated SPV. These off-balance sheet deals create volatility in bond prices - despite company...

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Red Star Macalline Group Debt Analysis (June 2021)

Red Star Macalline Group Debt Analysis (June 2021)

Analyzing the Red Star Macalline Group debt, our Asia Core Credit team took a deep dive into the company’s plans for the future after the company held an on-site investor event on June 9, 2021. The event gave great insight into the company’s plans to lower interest-bearing debt by RMB 10B within three years, plus the Red Star Macalline Group debt has given the company reason to repay their corporate bonds with their own cash resources or proceeds from A-share private placement if the company receives the proceeds by then. Red Star Macalline does not have any onshore issuance plan...

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Alex and Ani Bankruptcy Case Summary

Alex and Ani Bankruptcy Case Summary

Filing for chapter 11 protections on Wednesday, June 9, 2021, the Alex and Ani bankruptcy came as a result of a significant revenue drop for the company in 2019 at the hand of operational and supply chain difficulties which created the necessity for a restructuring. In addition to the restructuring, Covid-19 had a major impact on the company’s sales, plus the outbreak came only six months after their consummation of the 2019 restructuring causing major issues for the company. Furthermore, the company has had significant turnover in their C-suite including departures from their CFO, chief technical officer, chief strategy officer,...

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EARNINGS: Saka Energi Q1’21 Revenue $46.7M, Down 39% YoY

EARNINGS: Saka Energi Q1’21 Revenue $46.7M, Down 39% YoY

Our Asia Core Credit team has been closely covering Indonesian energy company Saka Energi. The company's Q1'21 financial disclosures confirms our earlier scoop on the company's intent to prepare a sinking fund for its $625 million 4.45% senior notes due 2024. The company has also guided operational improvements that are converging or in some instances, outperforming Reorg's conservative valuation model that we published on May 25. Click through to read more or request a trial to Reorg's Asia coverage: https://reorg.com/earnings-saka-energi-q121-revenue-46-7m-down-39-yoy/

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Part 26A Recognition Issues in Europe in 2021

Part 26A Recognition Issues in Europe in 2021

The U.K. applied to join the Lugano Convention in April 2020, a time when the Brexit deadline was fast approaching. The convention governs the jurisdiction and the enforcement of judgments in civil and commercial matters between EU member states and Norway, Iceland and Switzerland. If Britain were allowed to join, a Part 26A restructuring would gain automatic recognition across EU member states. However the European Commission has stated that it is of the view that the U.K. should not be able to join the Lugano Convention, following Brexit. The English court, in Gategroup’s Part 26A plan, held that the Part...

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Part 26A Restructuring Trends in the Courts

Part 26A Restructuring Trends in the Courts

Virgin Atlantic became the first company to use the Part 26A restructuring tool, in September 2020, when its restructuring plan was sanctioned by the English High Court. The U.K. airline used the tool to implement a financial restructuring valued at £1.2 billion over 18 months. The group’s creditors were split into four classes: RCF plan creditors, operating lessor plan Creditors, connected party plan creditors and trade plan creditors, the latter of which had not committed to vote in favor of the plan at the time the restructuring was proposed. Eventually, the group won the support of all classes, but if...

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