Munsun shareholders agree to amend convertibles; changes take effect

By Wendy Van Sickle

Columbus, Ohio, Aug. 27 – Munsun Capital Group Ltd., formerly known as China Precious Metal Resources Holdings Co., Ltd., said shareholders approved some proposed amendments to its 7.25% convertible bonds due Aug. 4, 2019 at a special general meeting held Tuesday.

The amendments had previously been passed by holders of the convertibles, but remained subject to shareholder approval. The measures received approval from 50.6999% of voting shareholders, meeting the majority approval requirement, the company reported in a notice.

With the shareholder approval, a supplemental trust deed was executed on Tuesday and the amendments have become effective, Munsun reported.

As previously reported, on Aug. 1 holders or representatives of HK$248,880,762 of the convertibles, or 79.8%, were at a bondholder meeting to vote on the matter. All votes were in favor of the proposals.

Holders also agreed to a grace period, which became effective Aug. 4.

The company was seeking consents from bondholders to agree to proposed amendments through a written resolution.

The convertible bonds were due and payable in full with accrued interest on Aug. 4, and the total payment would have amounted to about HK$329 million.

The company said that in view of tight cash and bank balances, it was expected that it would have been difficult for the company to fulfill its obligations in full on Aug. 4.

The company proposed the following amendments:

• Extending the maturity of the convertibles to Sept. 30, 2021;

• Amending the interest rate to 8% per annum and the interest payment date to March 31 and Sept. 30 each year;

• Amending the conversion price to HK$0.088;

• Addition of a downward-only reset to the conversion price; and

• Addition of the partial redemption right which will be exercisable within the stipulated time periods at the option of the bondholder.

If the new proposals were not implemented, a grace period was not granted, or the company failed to pay the redemption amount, there would have been an event of default under the bonds, which in turn would have triggered the cross-default of other bank and/or other borrowings of the group.

Apart from the new proposals, the company said it was also exploring and considering other alternatives to ensure that its obligations under the convertibles could be fulfilled, such as other debt or equity financing, subject to the financial performance and conditions of the company and the then market conditions.

Shareholders on Tuesday also approved increasing the authorized share capital of the company and a specific mandate to issue conversion shares upon exercise of the conversion right under the amended terms and conditions of the bonds, according to the notice.

The Hong Kong-based precious metals mining and investment holding company sold HK$1,028,000,000 of the bonds in January 2013.

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