Hong Kong's New World Development to reduce $1.3 billion of its debt after early bond swap
A view shows the headquarters of New World Development at New World Tower, in Hong Kong, China September 27, 2024. REUTERS/Tyrone Siu
HONG KONG :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.
Later on Tuesday, New World said it would raise the size of its new perpetual bonds for the swap, targeting up to $1.79 billion of fresh 9 per cent notes — a step up from the initial $1.6 billion offer.
The company aims to exchange part of its $4.5 billion outstanding perpetuals, which carry coupons of 4.125 per cent to 6.25 per cent, into the new bonds at a 53 per cent haircut.
In the remaining portion of the exchange offer, New World also plans to swap part of its $2.3 billion senior notes due 2027-2031, currently carrying coupons between 3.75 per cent and 8.625 per cent, to new 7 per cent senior notes due 2031. The company said on Tuesday it expected to swap $107.3 million after the first deadline.
The company added a new second deadline of November 25 in an announcement late on Tuesday.
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.
For bondholders who tendered early by November 17, the haircut would be reduced to 50 per cent 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 per cent-8.625 per cent, to up to $300 million new 7 per cent senior notes due 2031.
Haircuts for these notes are between 12 per cent to 32.5 per cent and bondholders would also get a slightly lower haircut if they tendered by Monday.
The exchange offers will expire on December 2.
