‘Too late to halt lawsuits against Caesars’: bankruptcy Judge Goldgar says

U.S. bankruptcy judge Benjamin Goldgar, who was overseeing Caesars Entertainment’s operating unit’s bankruptcy stated that it would be difficult to halt bondholder lawsuits against the company in New York and Delaware given that proceedings had already begun.

Several hedge funds were suing the parent casino company for a total of $11.4bn, as it reneged on guarantees on bonds issued by its operating unit, which filed for bankruptcy in January 2015.

Parentco Caesars was planning to pump about $4bn into its operating unit to help restructure it.

Legal action against the parent could jeopardize the funding and force it into bankruptcy as well, the unit argued in seeking an injunction to stop the lawsuits.

Caesars has the right to terminate its funding agreement by 22 June 2016 if the judge does not halt the lawsuits by 15 June 2016, the unit’s lawyers said at the hearing.

The operating company of Caesars has spent about $1.1bn on interest payments on its first lien debt and administrative expenses. Further, if the parentco files for bankruptcy, it may incur additional expenses of $200m in restructuring costs.

Separately, according to an independent examiner’s report in March 2016, Caesars and its private equity sponsors Apollo Global and TPG Capital could face $5bn in damages from the operating unit’s bankruptcy. Junior bondholders are claiming $12.6bn as part of the bankruptcy.

Source: Reuters

Southern Korean central bank lowers rates to aid debt restructuring

South Korea’s central bank unexpectedly cut the benchmark seven-day repurchase rate to 1.25%, a new record low, to aid indebted companies in their restructuring plans. The South Korean won moved sharply lower.

The decision to cut benchmark rates was projected by only Goldman Sachs of 18 economists surveyed while others saw a reduction in the next couple of months.

South Korea’s sovereign yield dropped to a record low this month after minutes of the May meeting showed a board member called for lower rates while the government and central bank planned to create a KRW 11tn ($9.5bn) fund to facilitate corporate restructuring.
 
The board’s May minutes showed several members were worried about downside risks from the corporate overhaul such as unemployment and declining investment.
 
The government’s plans to aid corporate restructuring would support its ailing shipbuilders who had slashed jobs and were in process of restructuring their debt.
 
Source: Bloomberg
 

RBI Governor Rajan asks banks to refrain from taking majority stake in stressed-debt funds

According to Reserve Bank of India’s Governor Raghuram Rajan, banks should refrain from taking a majority stake in planned stressed-asset funds, and prefers external investors and funds to take up that role.

His words came amid the Indian government’s plans to find ways to lower bank’s distressed debt pile of $120bn, or 11.5% of all loans.

However, bankers have said talks are on for two kinds of stressed-asset funds: one that would buy bad loans from the banks and the other that can invest in companies needing more capital.

Rajan also stressed that pricing would be a key issue for a stressed fund if it wanted to buy bad loans from the banks.

The government, as part of its plan of implementing new bankruptcy laws, is considering setting up an external panel to decide on the quantum of ‘haircuts’ taken on the bad loans, mainly due to disagreements between companies and banks at the time of transacting on such loans.

Source: Reuters

Brazilian miner Vale S.A. issues U.S.-dollar bonds

Brazilian miner Vale S.A. tapped the U.S. dollar debt market for the first time in almost four years as a commodity-price recovery brings down the Brazilian mining giant’s borrowing costs.

The company’s subsidiary Vale Overseas Limited, issued and priced its senior unsecured $1.25bn bond due 2021. The notes are guaranteed by Vale S.A.

Joint Books are BB Securities, Bank of America, Bradesco BBI, HSBC and Santander.

The company, which last sold U.S. dollar bonds in 2012, would use proceeds from the issuance to develop its iron-ore project, which it plans to commission later in 2016.

Separately, the company plans on divesting assets worth $10bn by 2017 after reporting a fourth-quarter net loss of $8.6bn.

Source: Bloomberg

Source:

Rio Tinto commences its $3bn bond buy-back plan

Mining giant Rio Tinto is buying back as much as $3bn of its debt amid a rebounding commodity market.

The company plans to repurchase $2.9bn of notes due in 2018 and will then consider offers from holders of about $5.2bn of bonds maturing in 2020 to 2022.

The buy-back is the company’s second in 2016, with the company repurchasing $1.5bn of debt back in April 2016.

Commodity prices gained in the last week, ending a five-year decline, on gains in prices of raw materials from zinc to soybeans.

In order to cut down on costs and bolster its balance sheet during the commodity slump, Rio sold about $4.7 billion of assets since 2013 and announced a cut in dividend in February 2016.

Source: Bloomberg

World Bank cuts forecast for India’s growth to 7.6-7.7%

The World Bank on Tuesday cut GDP growth projections for India by up to three percentage points to 7.6-7.7% for fiscal years 2016-17 and 2017-18 despite 5 rate cuts which failed to spur corporate lending.

Previously, in January this year, India was projected to grow at 7.9% during both these years.

Despite the reduction in forecasts, India would continue to be the fastest growing major economy in the world.

However, the World Bank warned of headwinds the country could face in the next few years.

Monsoons in India would largely determine the growth of the country’s economy as rural consumption has been affected over the last couple of years by lower than expected rainfall.

Credit growth in the corporate sector has been hampered by rising stressed assets in the aviation, steel and infrastructure sectors.

However, efforts made by India to ramp up FDI in various sectors would help bring in much desired investment in manufacturing and service sectors.

The ‘Make in India’ campaign, aimed at spurring FDI, has seen investment pledges worth $45bn as of December 2015.

Source: Business Standard

 

 

Yahoo hires investment bank to explore sale of patents

According to sources, Yahoo Inc. has mandated investment bank Black Stone IP LLC to sell about 3,000 of its internet company’s patents.

The company notified a number of potential buyers for the patents, which date back to when the company was founded in 1996 and also include its original search technology.

The deadline for bids for the patents has been set for mid-June 2016 by Yahoo.

Previously in March 2016, the company had stated that it planned on sales of $1-3bn of patents and non-core assets.

Source: Reuters