Easy Tactic relaunches consent solicitation, will convene new meetings

By Mary-Katherine Stinson

Lexington, Ky., March 27 – Easy Tactic Ltd., a subsidiary of Guangzhou R&F Properties Co., Ltd., announced it will convene new meetings for its relaunched consent solicitation for three series of notes.

The following notes are subject to the solicitation:

• $1,443,307,054 outstanding 6½% cash/7½% PIK senior notes due 2025 (ISIN: XS2495355674);

• $2,460,990,567 outstanding 6½% cash/7½% PIK senior notes due 2027 (ISIN: XS2495358009); and

• $1,793,343,641 outstanding 6½% cash/7½% PIK senior notes due 2028 (ISIN: XS2495359403).

The issuer has decided to convene new meetings to be held at 10 p.m. ET on April 5.

The release noticed that the proposals have not changed.

Consent instructions delivered in relation to the original meetings are null and void. Noteholders wishing to attend and/or vote at a new meeting will have to submit new consent instructions for the new meetings according to the relevant procedures.

Consent instructions must be received by the tabulation and information agent at or prior to noon p.m. ET on April 2.

The consent fee has also been updated.

Holders will receive an early consent fee in the form of a cash payment of $5 per $1,000 principal amount of notes if their consents are received by the early deadline and a base consent fee in the form of a cash payment of $2.50 per $1,000 principal amount of the notes if their consents are delivered before the expiration of the offer.

Conditionally, to receive payment consents need to be received by the expiration time, all meetings need to be quorate and validly held, the extraordinary resolution needs to be approved for each series by a relevant majority, the consent conditions need to be satisfied and the notes need to remain blocked before the relevant meeting.

Rationale

Under the terms of the London One Loan, R&F One (UK) Ltd., as the borrower, is required to ensure that, on or before the earlier of the project completion date and the first sales milestone date of May 13, the total gross disposal proceeds derived from the specified London assets cannot be less than £240 million. As of March 27, no sales have been made other than sales of affordable housing units, totaling less than £20 million.

The lenders have informed the borrower that they intend to exercise their full rights under the London One loan if the first sales milestone is not reached by the appropriate date. Given the difficulties to satisfy the milestone, the release states that the transaction will help ease liquidity of the group by discharging the London One loan.

A relaunched consent solicitation is being conducted to facilitate the transaction.

It seeks to amend the notes to eliminate restrictive covenants to facilitate the proposed disposal of R&F.

Consent instructions have two voting options: to vote in favor of the consent solicitations and consider participating in the exchange offers and to vote in favor of the consent solicitations only.

The acquisition is expected to close on April 23.

The original consent deadline, now no longer relevant, was 11 a.m. ET on March 18.

Noteholder meetings for each series were to be held on March 21 but were subsequently canceled.

Recap

The exercises relate to a potential sale and substantial disposal of the property of R&F International Real Estate Investment Co. Ltd.

As previously reported, London One signed on Feb. 6 a definitive agreement to acquire R&F International for $800 million, mainly representing the acquisition of the freehold land and buildings more commonly known as Market Towers or One Nine Elms in London.

Previous update

The offeror, London One Ltd., previously updated the terms of the exchange offers, which were originally launched on Feb. 28.

The main changes to the terms of the exchange offer were as follows:

• Increase of the initial capital call amount to £840 million from £820 million and, consequently, modification to the fixed ratio such that for each £2,100 in principal amount of tranche A1 perpetual bonds committed to subscribe for by an eligible holder, such holder is required to (i) tender $1,000 principal amount of existing notes for exchange into $1,000 principal amount of tranche B1 perpetual bonds and (ii) tender $1,000 principal amount of existing notes for exchange into $1,000 principal amount of tranche B2 perpetual bonds, where previously the fixed ratio requirement was tranche A1 £2,050 to tranche B1 $1,000 to tranche B2 $1,000;

• Increase to the loan advanced to the seller for the purpose of funding the costs and expenses for the consent solicitation and the acquisition to $30 million from $5 million;

• Revision to the timetable for the exchange offer (which was not made explicit in Thursday’s company announcement);

• Inclusion of an additional provision in the terms and conditions of the perpetual bonds from the offeror to provide updates from time to time on the progress of any disposal or pre-sales of any part or unit forming part of the property, rental or other income derived from the property and a provision that permits the offeror to elect to require the tranche C perpetual bonds to be cleared through the facilities of Euroclear/Clearstream, which will thereafter be held in global registered form by a nominee of a common depositary for the benefit of the relevant accountholders; and

• Other miscellaneous changes.

Prior amendment

On March 8, Easy Tactic made an update to its consent solicitation for the three notes, moving from consent solicitations with no fee offered to consenting holders to a payment model, as previously reported.

Consenting holders would have received $1.00 per $1,000 note.

The payment date was originally expected to be as soon as practicable after March 25.

Exchange offers

The offeror commenced two parallel exchange offers to invite eligible noteholders to tender their existing notes for new perpetual instruments issued by London One.

The exchange offers comprise an invitation to eligible noteholders to tender their existing notes for exchange into tranche B1 perpetual bonds, which are expected to be issued in a total principal amount of $400 million, and tranche B2 perpetual bonds, which are expected to be issued in a total principal amount of $400 million, and simultaneously paying cash consideration to subscribe for tranche A perpetual bonds, which are expected to be issued up to a total principal amount of £820 million, in each case issued by the offeror.

The second, separate invitation is for eligible noteholders to tender their existing notes for exchange into tranche C perpetual bonds issued by London One, which are expected to be issued up to a total principal amount of $200 million.

The tranche B1 and B2 perpetual bonds will be exchanged on a par basis. The consideration for the tranche C bonds will be in the range of $100 to $800 of tranche C bonds per $1,000 of existing notes, with the minimum consideration specified by the noteholder.

The consideration to be paid by London One for the acquisition will primarily comprise at least $800 million of the existing notes, and the purpose of the exchange offers is to acquire sufficient notes to pay proceeds and raise necessary cash proceeds to repay loans of the target, which is expected to require £820 million.

The exchange offers expired at 11 a.m. ET on March 19.

In order for a holder to tender existing notes under the tranche A and B exchange offers, the holder must apply to become either a key investor or an investor.

Completion of the exchange offers was conditioned on passing and implementing the extraordinary resolutions under the consent solicitation and the approval of company shareholders, among other things.

Morrow Sodali Ltd. (gzrf@investor.morrowsodali.com) and Kingsway Capital Ltd. were the information agents and the exchange information agents, respectively, and Madison Pacific Trust Ltd. (mp_kyc@madisonpac.com) was the exchange agent and escrow agent for the exchange offers.

Details

J.P. Morgan Securities (Asia Pacific) Ltd. (+852 2800 7632, +852 2800 8006 or Liability_Management_GZRF@jpmorgan.com) is the solicitation agent for the consent solicitations.

Morrow Sodali Ltd. (+44 20 4513 6933, +852 2319 4130 or gzrf@investor.morrowsodali.com) is the tabulation and information agent.

Easy Tactic is a special purpose vehicle of Guangzhou, China-based real estate developer R&F Properties.

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