China’s 21Vianet asks holders for amendments, waivers to 6 7/8% bonds

By Susanna Moon

Chicago, Sept. 2 – 21Vianet Group, Inc. began a consent solicitation for amendments and waivers to its 6 7/8% bonds due 2017, according to a 6-K filing with the Securities and Exchange Commission.

The solicitation will remain open until 10 p.m. ET on Sept. 13.

If the amendments are approved, the company said it will pay bondholders who voted for them RMB 400 for each RMB 100,000 principal amount of the bonds for which consents were delivered.

The company also will deposit into an interest reserve account RMB 14,458,125 for interest payable on one interest period on the outstanding bonds within 30 days of the expiration.

Settlement is expected to occur on Sept. 21.

The dealer manager is DBS Bank Ltd. The information and tabulation agent is Citicorp International Ltd. (Fax +852 2621 3183 or apac.at.operations@citi.com).

As announced Aug. 29, investors had tendered RMB 1,579,400,000 principal amount, or 78.97%, of the 6 7/8% bonds due 2017 in the change-of-control offer that ended at 10 p.m. ET on Aug. 25.

The company accepted all of the notes tendered in the offer and paid RMB 1,613,935,792 in cash.

After settlement, there was RMB 420.6 million of the bonds left outstanding.

As announced Aug. 1, the company was offering to purchase the notes at 101 plus accrued interest to but excluding the purchase date because it believed a change of control occurred due to a transaction completed on June 2.

The company then said on Aug. 24 that it would not be soliciting consents in conjunction with its change-of-control offer after having previously announced the possibility of adding a consent solicitation.

The company had wanted to obtain a waiver of a requirement to meet specified financial ratios under the bonds for the period ended June 30.

As a result of a drop in adjusted EBITDA for the six-month period ended June 30, the company will not be able to meet those financial ratios; however, the company said it believes that that decline is due to non-recurring factors and one-time expenses, which should be temporary.

On June 2, under a subscription agreement, an affiliated investment vehicle of Tus-Holdings Co., Ltd. made a $388 million investment in 21Vianet and subscribed for newly issued 31,996,874 class A ordinary shares and 111,053,390 class B ordinary shares. Upon completion of the transaction, Tus-Holdings held about 21.4% equity ownership in 21Vianet, representing about 51% of the voting power of the company.

21Vianet is a carrier-neutral internet data center services provider based in Beijing.

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