Huawei plans to raise $2bn debt

Chinese telecom company Huawei Technologies Co. is planning to raise a $2bn through a USD-denominated bond maturing in 2026.

The company is still in discussions with banks on the terms of the issuance and the size of the deal.

Banks likely to manage the bond issue include DBS Bank, ANZ Banking Group, Standard Chartered and Bank of China.

According to bankers, it appears that the deal could be completed as early as  April 2016.

Previously, the company had issued a $1bn USD bond last year, which was oversubscribed.

Source: WSJ

 

 

 

 

Warren Resources continues debt restructuring talks with lenders

U.S-based oil E&P firm Warren Resources, Inc. is engaged in discussions with its first lien and second lien lenders and an ad hoc group of unsecured noteholders, regarding a restructuring of its debt obligations. These discussions would continue either through an out-of-court restructuring settlement or through a bankruptcy court proceeding.

First lien lenders under Warren’s credit facility had made a restructuring proposal that would help the company deleverage by converting a substantial amount of its debt into equity.

Warren had presented this proposal to its second lien lenders and to the holders of more than 95% of its unsecured bonds.

However, a consensus agreement among all three categories of creditors has not been reached. Failure to reach an agreement may force the company to file for bankruptcy.

As of 31 March 2016, Warren’s first lien creditors held debt of approximately $235m, second lien creditors held debt of approximately $52m and unsecured bondholders held approximately $167m of its senior unsecured notes. During the same period, cash position was $16.85m, of which $10.04m was in a restricted account under the control of the lenders under its first lien credit facility.

Warren elected not to make an interest payment of approximately $7.5m interest payment on 1 February 2016 on its unsecured notes.

With the expiry of the applicable 30-day grace period for the interest payment, as per the indenture governing the notes, the trustee and bondholders holding atleast 25% of the unsecured notes have the right demand payment of the entire principal amount of the notes plus unpaid interest.

In addition, this creates a cross-default on other debt instruments of Warren as well. However, no such acceleration on Warren’s debt obligations has occurred so far.

Warren’s advisors on its debt restructuring are Andrews Kurth LLP (as restructuring counsel) and Jefferies LLC (as financial advisor).

Source:  StreetInsider

China-backed State Grid evaluates Abengoa’s Brazilian assets

China State Grid Corp. has shown interest in acquiring Abengoa S.A.’s assets under construction in Brazil.

Officials from the state-owned firm visited Abengoa’s energy transmission project sites in Brazil which are under construction to evaluate a takeover.

According to sources, these assets comprise of Abengoa’s portfolio of assets whose construction had stalled last year when the firm ran into financial problems.

Sources further stated that the Brazilian government wanted to avoid a piecemeal sale of Abengoa’s Brazilian assets to avoid delays. Some of the major assets include a major transmission line linking the Belo Monte hydroelectric dam in the Amazon to consumer markets.

State Grid has invested more than $1bn in Brazil’s energy sector since 2010.

Abengoa has about 6,000 kms of transmission lines which are under construction, requiring billions of dollars in investments.

Further, the company has debts of more than BRL 800m ($218m) with equipment suppliers in the country, according to the electricity industry association Abinee.

Source: Reuters

Chaparral Energy to miss bond payment, may file for bankruptcy

According to sources, U.S.-based private oil and gas firm Chaparral Energy would miss a mandatory 1 April 2016 coupon payment on its $300m bond.

Separately, the company, in its FY 2015 annual filing stated that it may look at the possibility of filing for a Chapter 11 bankruptcy.

Further, Chaparral had, on 1 March 2016, missed a $16.5m interest payment on another bond, kicking off a 30-day grace period.

As per its FY 2015 filing, Chaparral generated a net loss of $1.3bn for the period and had about $1.6bn in debt.

Chaparral drew down the balance on its $548m RCF in February. The lenders will re-determine the credit facility on 1 May 2016, and it expects its borrowing base to decrease significantly.

The company would then repay the outstanding balance within 30 days or in six monthly installments.

Source: Reuters

GCC region to face debt refinancing difficulty: HSBC

According to HSBC Holdings plc, nations of the Gulf Cooperation Council (GCC) may face some difficulty in refinancing $94bn worth of debt by 2018, after being impacted by falling crude oil prices, slowing growth, rising rates and rating downgrades.

GCC countries, dominated by United Arab Emirates and Qatar, face $52bn of bonds and $42bn of syndicated loans maturing in the next two years. These countries also have a cumulative fiscal and current account deficit of $395bn over the period. Further, Gulf nations have a total of $610bn of FX-denominated debt and syndicated loans outstanding currently.

HSBC is confident that these nations would be able to tackle the issues of maturing debt and fiscal deficits through a raft of issuances of sovereign debt in the near-term.

Source: Bloomberg

 

Anglo American to buy back $1.3bn debt

Mining firm Anglo American’s subsidiary Anglo American Capital plc plans to re-purchase upto $1.3bn of its bonds from investors as part of its turnaround plan aimed at reducing debt and divesting certain assets.

The company published a tender offer on 18 February 2016 to purchase debt which ends on 16 March 2016.

The plan to puchase debt comes on the news of Moodys’ downgrading the company’s credit ratings to Ba3 from Baa3 on 15 February 2016, ahead of its FY 2015 results announced a day later. S&P also downgraded the company’s credit rating to BB from BBB-.

Key takeaways from the FY 2015 earnings release:

  • Revenue of $23bn vs. $30.9bn a year ago
  • Net loss before tax of $5.5bn vs. loss of $259m a year ago
  • EBIT at $2.2bn vs. $4.9bn a year ago
  • EBITDA at $4.8bn vs. $7.8bn a year ago

Targets for 2016:

  • $3-4bn of asset disposals targeted
  • pro-forma net debt to decline below $10bn by 2016 and to touch $6bn in the medium-term
  • Net Leverage to be less than 2.5x in the medium-term
  • Suspension of dividend payments
  • Capex for 2016 of less than $3bn

Bonds to be purchased include EUR, GBP and USD -denominated bonds with the following maturities:

  • 4.375% bonds due December 2016
  • 1.75% bonds due November 2017
  • 1.75% bonds due May 2018
  • 6.875% bonds due April 2018
  • 2.5% bonds due September 2018
  • 2.625% USD bonds due 2017

Sources: Company Press Releases, PR Newswire, Bloomberg & FT