Winsway seeks restructure of senior notes after missing interest payment

Winsway Enterprises has missed an interest obligation as the metallurgical coal trading house scrambled to restructure its senior notes amid persistently low prices.

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The Hong Kong-listed company missed an April 8 deadline for a $13.15-million interest payment for its 8.5% senior notes due in 2016 and the 30-day grace period expired at the end of last week, Winsway said late on Friday May 8.

A committee of bondholders set up to facilitate discussions between them and Winsway has appointed Houlihan Lokey Limited and Akin Gump Strauss Hauer & Feld LLP as their financial and legal advisers, respectively, it said.

Winsway is one of China’s top three met coal traders but the country’s intake of the steelmaking raw material has shrunk over the past two years. Coking coal imports for the first quarter of this year totalled 10.92 million tonnes, down 15.7% year-on-year, according to the latest customs data.

Of the $500-million senior notes in question, which were issued in 2011, $309.3 million in principal amount remain outstanding.

Winsway said last Friday that it had entered into a standstill agreement for “a significant percentage” of the outstanding principal amount, whereby the bondholders would not take any enforcement action against the company, according to the statement.

The standstill agreement will expire on May 31, unless extended by mutual agreement.

Winsway added that it seeks to conclude further standstill agreements with other bondholders.

In addition, Winsway said it was still in discussions with potential equity investors for investment through the issuance of new shares.

Winsway recorded a negative adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) for a third consecutive year in 2014 amid a persistently depressed coking coal market, according to its latest annual report published in March.