Three Chinese developers Jiangsu Zhongnan, Datang Group, and Zhongliang Holdings crept to complete exchange offers and push maturities. But default is still looming at the result of their efforts. Jiangsu Zhongnan Construction Group has both launched and completed the exchange offer for two bonds. These two bonds would mature on June 8 and June 18.
The issue of the bonds was $157m which is 12% June 2023 bonds for the holders. As a result, the company received 70% consent. But it is only $39m of principal as of June 8. Then the $18m of the June 18 notes left outstanding. However, the firm said that it did not mean to repay the existing notes before the maturity. Plus, it reopened the exchange offer with the remaining investors. Therefore, the bond which should be done on June 8 was in default, it does not have a grace period.
Datang Group Holdings on the other hand, tried to obtain 95% consent to exchange its $200m which is 12.5% 2022 bond for the new one-year notes. However, the firm also added that it did not mean to pay the remaining $16.05m on time. Meanwhile, Zhongliang Holdings Group got 90.47% plus 83.66% consent. This is for an exchange for the company’s May 2022 and July 2022 bonds. However, the firm launched a new offer on June 1 and targeted the $27m and $71m left outstanding.
The firm did not redeem the bonds maturity on May 19 2022 as well as announced that it could not repay July 2022. The exchange in this case becomes distressed exchanges. This is because the companies still have last minute efforts to avoid the court. An analyst argues that the three companies are only kicking the can down the road. In order to extend maturity, the firms should exchange offers and consent solicitations. These two approaches depend more on the governing law. Although, they have struggled for this, defaults crept in.