China New Town to buy RMB 123.13 million 17.75% notes from Highbridge

New York, June 29 - China New Town Development Co. Ltd. said it has agreed to buy back RMB 123.13 million of its 17.75% U.S. dollar settled senior secured guaranteed notes from Highbridge International LLC and Highbridge Asia Opportunities Master Fund, LP.

In exchange, China New Town will issue 73,845,703 ordinary shares and pay the dollar equivalent of RMB 73.878 million.

The new shares will be issued at a price of S$0.0981, a 10% discount to the average price of S$0.1090 on June 29.

The company may obtain an unsecured interest-free loan of RMB 102.5 million from executive chairman and director Shi Jian.

China New Town said the buyback will cut its interest expense, obtain a discount from the principal amount, allowing it take advantage of a "moderate recovery" in sentiment towards the Chinese property market, and possibly prompt other investors to consider selling their notes to the company.

On June 3, the company said it planned an exchange offer for the notes and said noteholders had agreed to enter into discussions.

It said the proposed terms - reflected in the payments to Highbridge - were the dollar equivalent of RMB 600 and 349.07 new ordinary shares for each RMB 1,000 principal amount of notes. Holders would also receive accrued interest up to and including July 31 in the form of 250.67 shares per note.

At the time China New Town said some of the noteholders, namely Highbridge and Och-Ziff, have agreed in principle to sell all of their notes to the company, and Forum has agreed in principle to sell 50% of its notes.

The company is a Hong Kong-based new town developer in the People's Republic of China. It currently has RMB 593.3 million of the notes outstanding.

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