BreadTalk seeks noteholder approval to waive technical default for S$100m notes

BREADTALK Group has launched a consent solicitation exercise (CSE) to get noteholders' approval to waive a technical default for S$100 million 4 per cent fixed-rate notes due 2023, the company said on Wednesday.

The food and beverage player is seeking to waive breaches of the consolidated tangible net worth covenant and the consolidated total borrowings to consolidated tangible net worth covenant.

Additionally, the exercise seeks to lower the thresholds of the covenants - consolidated tangible net worth will not be less than S$50 million while the consolidated total borrowings to consolidated tangible net worth will not exceed a 3.5:1 ratio from the quarter ending June 30, 2021.

Meanwhile, another CSE proposal to be voted on would suspend compliance from these two covenants for the period of Jan 1, 2020 to March 31, 2021.

The amendments and financial covenant holiday would give BreadTalk more financial flexibility amid challenging conditions, it said.

These conditions include the widening losses of the group's bakery business in China and Thailand, and significant deterioration of financial performance of the group's bakery and food atrium businesses in Hong Kong due to social unrest.

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The ongoing novel coronavirus pandemic also adds more uncertainty to the company's operations, BreadTalk said.

The CSE also proposes a call option for the notes, with a call price, set at 100.5 per cent of par, exercisable during the period commencing on, but excluding, Apr 24, 2020 and ending March 31, 2021.

The voting deadline for the CSE is Apr 13, 2.30pm. A noteholders meeting will be held on Apr 15, with results of the CSE to be announced after the meeting ends.

United Overseas Bank has been appointed solicitation agent for the CSE.

Last month, BreadTalk said the trustee of the notes had not given it notice to immediately repay noteholders following the technical default.

The company's founder had in February made a voluntary conditional cash offer of S$0.77 per share to take BreadTalk private.

BreadTalk shares were unchanged at 73.5 Singapore cents as at 11.45am on Thursday.