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China Energy Reserve misses final redemption date payment on 5¼% bonds
By Caroline Salls
Pittsburgh, May 31 – China Energy Reserve and Chemicals Group Overseas Capital Co. Ltd. failed to pay the principal amount and accrued interest due since the maturity date on its $350 million of 5¼% guaranteed bonds due 2018 on the May 11 final redemption date, according to a news release.
The interest due up to the maturity date was paid on May 16.
China Energy said the non-payment triggered an event of default under the 2018 bonds and triggered cross-defaults under its 2021 and 2022 bonds.
According to the release, the bond guarantor has had restricted access to financing channels in the People’s Republic of China because of the tightening in credit conditions over the last two years.
As the cash flow and capital requirements of the guarantor and its subsidiaries continued to increase, China Energy said this resulted in a liquidity crunch on the group.
While the group expects to continue its business operations as usual, it plans to divest some of its assets in order to resolve its current cash flow difficulties, the release said.
While the group is contemplating making asset divestments, China Energy said the issuers and guarantors propose to suspend all interest payments due in 2018 on the 2021 and 2022 bonds, effective immediately.
In addition, China Energy said the issuers and guarantors are working with all relevant stakeholders to remedy the event of default and cross-default as soon as possible.
At the request of the issuers, trading in the 2021 and 2022 bonds listed on the Stock Exchange of Hong Kong Ltd. were suspended on May 28 until further notice pending discussions with the holders of the 2021 and 2022 bonds and their advisers.
The issuer is a subsidiary of China Energy Reserve and Chemicals Group Co. Ltd.
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