LOANS LEVERAGED LOANSHolders of 80% of K33.8bn (US$5.32bn)
in debts, including Russia’s Sberbank,
voted in favour of the deal that will put the
company in hands of creditors and
bondholders. The vote took place in the
commercial court in Zagreb.
The deal includes a debt-to-equity swap
and some loan write-offs to avert
bankruptcy.
Agrokor’s biggest single creditor,
Sberbank with loans of €1.1bn, will
become the company’s largest shareholder
with a 39.2% stake.
Bondholders will own 25%, local
Croatian banks 15.3% and Russia’s second
largest bank VTB will have a 7.5% stake.
The current management will hand the
company over to shareholders during a
TRANSITIONALûPERIOD ûWHICHûISûEXPECTEDûTOû
last a few months. After that shareholders
will appoint new management and agree
on new strategy for the company.
Analyst Andrej Grubisic told Reuters
that shareholders would face “a big
challenge” to restructure company
business.
“They (shareholders) will need to secure
business growth and make the company
MOREûPROlTABLEv
LOAN FOR TURK TEL STAKE#REDITORûBANKSûWILLûEXTENDûAûLOANûOFûUPûTOû
US$4bn to the special purpose vehicle they
are creating to take over 55% of TURK
TELEKOM as part of debt restructuring talks,
two sources close to the matter told
Reuters.
The majority stake will be used as
collateral for the loan.
h!û53BN
BNûLOANûWILLûBEûEXTENDEDûTOû
this special purpose vehicle and banks will
take the 55% stake as collateral,” one of the
sources said, adding that the plan is to
complete the process in the third quarter.
The precise size of the loan will be
determined by a valuation report that the
banks are conducting on the company.
The 55% stake is owned by Dubai-based OGER
TELECOM, which has failed to keep up payments
on a US$4.75bn loan it took out to acquire the
STAKEûINûTHEû4URKISHûlXED
LINEûOPERATOR
Akbank, Garanti and Isbank have applied
to Turkey’s competition authority to take
over 55% of Turk Telekom via an SPV.
!MONGû/GERû4ELECOMSûCREDITORûBANKS û
Akbank lent it US$1.7bn, Garanti lent about
US$1bn and Isbank about US$500m, according
TOûTHEûBANKSûlRST
QUARTERûlNANCIALûSTATEMENTS
The ultimate goal is to be able to sell the
stake.
The lenders conducted talks for a stake
sale with potential buyers Saudi Telecom
#OMPANYûANDû1ATAR
BASEDû/OREDOOûBUTû
failed to reach agreement.
Huiyuan Juice fights
loan squeeze
CHINA Borrower seeks another waiver, reviving concerns over food sectorCHINA HUIYUAN JUICE GROUP is seeking another
waiver on a €180m syndicated loan after
failing to fulfil the conditions under a previous
one granted less than three months ago,
adding to lenders’ concerns over China’s food
industry.
The Hong Kong-listed company was unable
to publish its 2017 annual results or resume
trading in its shares by June 29, breaching the
conditions of the first waiver it obtained on
April 19.
A few days before the deadline, Huiyuan
sent a second waiver request to lenders asking
for an extension to both requirements until the
end of November.
Banks are likely to grant the second waiver
after the borrower offered an increased
guarantee at a meeting on Thursday, sources
said.
However, the episode has added to
worries about China’s food sector, which has
been dogged by food safety scandals and
controversies.
“We have been traditionally cautious
on Chinese food companies due to safety
issues,” said a banker in Hong Kong.
“But in more recent years, food safety
seems no longer the only issue.
Companies are reporting various
problems. Just look at Huishan Dairy. That
is horrible.”
China Huishan Dairy Holdings faces
liquidation and delisting from the Hong
Kong stock exchange after its shares were
suspended following a sudden collapse in
March 2017.
China’s biggest integrated dairy producer
owes billions of dollars to creditors, including
Bank of China and HSBC.
Huiyuan Juice is still operating normally,
although its position is precarious. Without
a second waiver from its lenders, the
company would have to pay back the debt
immediately.
Failing to do so could also spark cross-
default provisions on other debt, including a
HK$1bn (US$127m) convertible bond
issue due 2019 and a US$200m 6.5%
senior bond offering due 2020. However,
the company has managed to repay a
€200m (US$235m) 1.55% three-year
issue bond due July 7 and it is seeking
a waiver from holders of the convertible
bonds.The convertible bonds give holders the
right to call an event of default and seek
repayment at 120% of the principal if the stock
is suspended for 10 days, but no action has
yet been taken. The sole investor when the
notes were issued in January was a company
controlled by Hui Ching Lau, chairman of
Qinqin Foodstuffs, another Hong Kong-listed
food company.RATING DOWNGRADES
Ratings agencies are taking a dim view of the
company’s prospects.
On June 12, Moody’s downgraded the
group, China’s largest privately owned juice
producer, by three notches to Caa1 from B1,
saying the need for the company to provide
the Hong Kong stock exchange with a full
explanation of why it had failed to disclose
an intercompany loan would delay the
resumption of share trading and increase its
liquidity risk.
On June 19, Fitch slashed Huiyuan’s
rating to CCC+ from B, following an earlier
downgrade on April 4 from B+.
“Fitch expects deteriorating liquidity and
reduced funding access. We also believe the
company could incur difficulties in moving a
large amount of onshore cash to offshore for
loan-repayment purposes,” the agency said.
“We see challenges over its operation and
general working capital needs – again due to
tight liquidity.”
Huiyuan’s shares have been suspended
since March 29 when it disclosed that it
had provided loans totalling Rmb4.28bn
(US$681m) to Beijing Huiyuan Beverage,
a company 65% owned by its largest
shareholder and chairman Zhu Xinli, between
August 2017 and March 2018.
Although the transaction was significant,
Huiyuan did not disclose it and did not obtain
approval from independent shareholders,
therefore violating several Hong Kong listing rules.
Moreover, the two corporate entities did not
sign any formal documentation until March
29, when they entered into an agreement to
document, and simultaneously terminate,
the prior loan transaction. By then, Beijing
Huiyuan Beverage had paid back the principal
and interest accrued in full.
Huiyuan Juice was not available for
comment.
Yan Jiang