Embattled New World Development said on Tuesday it expected $1.3 billion of its debt, majority of it being perpetual bonds, to be cut after setting an early deadline for its dollar bond exchange offer.
The firm, a major property developer in Hong Kong and the most indebted in the financial city, this month launched an exchange offer of up to $1.9 billion that aims to cut its perpetual bonds by one-third. The early deadline for bondholders to have a cash incentive and a smaller haircut ended on Monday.
The offer came as New World seeks to increase cashflow and ward off defaults in a challenging property and financing environment.
Earlier this year, the developer had deferred coupon payments worth $77.2 million on four perpetual bonds that were scheduled for June. It also clinched a crucial $11.24 billion loan refinancing package and a separate $760 million loan facility to boost liquidity.
“The Exchange Offers will enable the company to achieve significant deleveraging immediately,” New World said in a filing on Tuesday, adding it would reduce $1.02 billion of its outstanding perpetual bonds and $29.9 million of its senior notes after the early settlement.
Through the offer, New World aims to swap part of its $4.5 billion outstanding perpetual bonds, with coupons between 4.125% to 6.25%, to up to $1.6 billion new 9% perpetual bonds at a 53% haircut.
For bondholders who tendered early by November 17, the haircut would be reduced to 50% and they would be awarded $20 cash for each $1,000 bond.
New World also plans to swap part of its $2.3 billion senior notes due 2027-2031, currently carrying coupons between 3.75%-8.625%, to up to $300 million new 7% senior notes due 2031.
Haircuts for these notes are between 12% to 32.5% and bondholders would also get a slightly lower haircut if they tendered by Monday.
The exchange offers will expire on December 2.
Reuters
