Malaysia-based state investment company 1Malaysia Development Bhd. (1MDB) paid interest outstanding on its Islamic debt after missing two payments on other securities earlier.
1MDB made a scheduled payment of MYR 143.8m ($34.9m) on its MYR 5bn 5.75% notes due 2039.
The company had previously missed the coupons for two sets of dollar-denominated bonds amid a dispute with Abu Dhabi’s International Petroleum Investment Co., which had guaranteed the debt.
That led to a default by 1MDB in April, adding to the financial scandals for the company that is already a target of global investigations into allegations of money laundering and embezzlement. 1MDB has consistently denied wrongdoing.
S&P downgraded Rolta India Ltd. to CCC- from B+ as the company missed a $6.8m interest payment on its 10.75% 2018 unsecured notes. Rolta India was the guarantor of the note.
The payment was due on 16 May 2016.
Further, ratings on the subsidiaries of the India-based IT solutions firm, Rolta Americas LLC and Rolta LLC were also downgraded to the same level as Rolta India Ltd.
As per S&P, it appears that there is uncertainty on the company’s ability to meet its interest payment within the 30-day grace period ending on 15 June 2016.
However, company CEO K.K. Singh stated that the company was confident in making the interest payment before the end of the grace period.
The company’s receivables had increased from 120-125 days to 180-190 days, leading to a cash crunch.
A credit ratings change, in future, would hinge on the company’s ability to make the above mentioned interest payment.
Source: Business Standard
According to Rogerio Nkomo, a spokesman for Mozambique’s finance ministry, the nation was close to reaching a loan restructuring agreement with Russian bank VTB on a loan made to state-owned firm Mozambique Asset Management (MAM). Previously, MAM had missed a $178m interest payment on VTB Bank’s loan on 23 May 2016.
According to Mr. Nkomo, matters pertaining to restructuring of the loan and payment of interest would be resolved within the coming few days.
The cash-strapped nation’s problems increased after the missed interest payment. A group of donors have requested the government to reveal the shareholding structure of MAM and a second state-owned company, Proindicus, which was lent $622m in 2013.
As a result of the situation, S&P downgraded Mozambique’s sovereign credit rating to CCC from B-, which estimated that Mozambique’s net general debt was 90% of its GDP in 2016. Further, Fitch Ratings also lowered the nation’s rating this month to CC from CCC, saying the nation was at a greater risk of default.
U.S-based CHC Group Ltd., which is engaged in the provision of transportation services to the offshore oil and gas industry, filed for Chapter-11 bankruptcy. The filing came days after a fatal accident of one of its helicopters in Norway, which forced the company to ground much of its fleet.
As of 31 January 2016, the company had debt of $2.19bn against assets of $2.17bn and operated a fleet of 231 helicopters as on 31 January 2016. Industry experts estimated that one-fifth of the company’s fleet was idle, due to lack of demand for its services from oil & gas companies, forcing it to explore cost-cutting options.
Further, on 15 April 2016, the company missed a $46m interest payment on approximately $1bn of its bonds, triggering a 30-day grace period to make the payment and avoid default.
Weil Gotshal & Manges and Debevoise & Plimpton are the legal representatives of the company.
Financial advisers to CHC are Seabury Advisors, PJT Partners and CDG Group.
Ultra Petroleum Corp., an oil and gas explorer, filed for bankruptcy with $1.3bn of assets and $3.9bn of debt on a prolonged downturn in oil prices.
The company has requested, in courts, to permit it to continue with its surety bonding programme ($12.6m outstanding), which secures its obligations on plugging of wells, environmental damage and road damage.
Previously, the company missed certain interest payments on its debt. Further, Sempra Rockies Marketing LLC, a pipeline operator sued Ultra for failure to pay it transport fees.
Malaysia-based 1Malaysia Development Bhd. (1MDB) stated that it had missed a $50m interest payment on its $1.75bn bond amid a dispute with Abu Dhabi’s sovereign wealth fund over which party was required to make the payment.
The Malaysian state fund withheld the interest payment because Abu Dhabi’s International Petroleum Investment Co. (IPIC), which is the co-guarantor of the 5.75% bonds maturing in 2022, hadn’t paid the obligation either. The missed payment triggered a cross-default on 1MDB’s MYR 7.4bn ($1.9 billion) of debt.
The two companies have been locked in a dispute over 1MDB’s debt obligations to IPIC under an agreement reached in May 2015. As part of the agreement, the IPIC had then stated that it would assume the obligation to pay interest due under $3.5bn of 1MDB bonds that it had guaranteed. IPIC said this month that 1MDB had defaulted on the agreement after the Malaysian fund failed to pay it more than $1bn in connection with a loan.
The default is the latest episode in financial scandals that have rocked 1MDB, already a target of global investigations into allegations of money laundering and embezzlement. It has consistently denied wrongdoing.
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).
U.S-based oil and gas producer Chaparral Energy Inc. has reached a temporary agreement with lenders, buying it additional time to complete negotiations.
As per a regulatory filing, Chaparral stated that it had reached a forbearance agreement with senior bond holders and other lenders who agreed to not exercise their right to call the notes at least until 15 April 2016.
Previously, Chaparral missed an interest payment of $16.5m despite a 30-day grace period after its independent auditors had “substantial doubts” over the company’s ability to continue as a going concern.
Chaparral owed $1.6bn in debt to creditors as of December 2015. The company had drawn another $141m in February, maximizing its credit limit. Cash on the company’s books as of March 2016 was $176m.
U.S-based oil and gas explorer Ultra Petroleum Corp., deferred making an interest payment of approximately $26m on its 6.125% bonds due 2024. The payment was due to creditors on 1 April 2016.
The company, as per its indenture governing the 2024 notes, permits it a grace period of 30 days to make the interest payment.
Failure to either make a payment within the grace period, or obtain a waiver from the bond holders of the 2024 notes would result in a technical default.