HONG KONG, Nov 18 (Reuters) – Embattled New World Development (0017.HK), opens new tab said on Tuesday it expected $1.3 billion of its debt, majority of it being perpetual bonds, to be cut after setting an early deadline for its dollar bond exchange offer.The firm, a major property developer in Hong Kong and the most indebted in the financial city, this month launched an exchange offer of up to $1.9 billion that aims to cut its perpetual bonds by one-third. The early deadline for bondholders to have a cash incentive and a smaller haircut ended on Monday.
Sign up here.
Later on Tuesday, New World said it would raise the size of its new perpetual bonds for the swap, targeting up to $1.79 billion of fresh 9% notes — a step up from the initial $1.6 billion offer.
The company aims to exchange part of its $4.5 billion outstanding perpetuals, which carry coupons of 4.125% to 6.25%, into the new bonds at a 53% haircut.
In the remaining portion of the exchange offer, New World also plans to swap part of its $2.3 billion senior notes due 2027-2031, currently carrying coupons between 3.75% and 8.625%, to new 7% senior notes due 2031. The company said on Tuesday it expected to swap $107.3 million after the first deadline.
The company added a new second deadline of November 25 in an announcement late on Tuesday.
The offer came as New World seeks to increase cashflow and ward off defaults in a challenging property and financing environment.
Earlier this year, the developer had deferred coupon payments worth $77.2 million on four perpetual bonds that were scheduled for June. It also clinched a crucial $11.24 billion loan refinancing package and a separate $760 million loan facility to boost liquidity.
“The Exchange Offers will enable the company to achieve significant deleveraging immediately,” New World said in a filing on Tuesday, adding it would reduce $1.02 billion of its outstanding perpetual bonds and $29.9 million of its senior notes after the early settlement.
For bondholders who tendered early by November 17, the haircut would be reduced to 50% and they would be awarded $20 cash for each $1,000 bond.
New World also plans to swap part of its $2.3 billion senior notes due 2027-2031, currently carrying coupons between 3.75%-8.625%, to up to $300 million new 7% senior notes due 2031.
Haircuts for these notes are between 12% to 32.5% and bondholders would also get a slightly lower haircut if they tendered by Monday.
The exchange offers will expire on December 2.
Reporting by Clare Jim; Editing by Shri Navaratnam and Maju Samuel
Our Standards: The Thomson Reuters Trust Principles., opens new tab