CWT redeems bonds but uncertainty looms

Singapore

A COLLECTIVE sigh of relief could be heard Thursday when CWT Pte Ltd, the Singapore-based logistics unit of HNA, confirmed that it had fully redeemed its S$100 million notes due the same day, together with accrued interest.

Note holders were bracing for the worst after CWT's parent company, Hong Kong-listed CWT International, said on Tuesday that it had failed to pay interest on a HK$1.4 billion (S$241.7 million) facility.

CWT International (CWTI) faces asset seizure for the default. Its lenders have said that they will take possession of all of CWTI's charged assets, including its 100 per cent shareholding in Singapore's CWT, if the debts were not repaid by Wednesday.

CWTI said on Tuesday that it has been actively negotiating with lenders. No updates have been given since. Calls to the CWT office in Singapore went unanswered.

CWT became a part of the Chinese conglomerate HNA Group in 2017, when HNA privatised Singapore-listed CWT through a special vehicle of Hong Kong-listed HNA Holding Group Co. Later, HNA Holding Group Co was renamed as CWT International.

However, Singapore's CWT operates independently from its parent and its business is ringfenced from the parent, a source close to the company told The Business Times.

"It's business as usual," the source added, despite the financial troubles at the parent company level.

The ringfencing does not prevent CWT from selling assets and upstreaming the dividends to its parent CWTI.

In July last year, shortly after CWT was delisted in December of 2017, CWT sold five Singapore warehouses to Mapletree Logistics Trust for S$730 million, a 3.3 per cent discount to their last independent valuation.

Out of the S$721 million in net proceeds, roughly 75 per cent would be used to repay CWTI's financing, CWTI said at the time. HNA has also been trying to find a buyer for CWT since September last year.

CWT's series 001 Singdollar notes which were redeemed on Thursday carried a 3.9 per cent coupon. It still has an outstanding tranche of S$100 million series 003, 4.8 per cent Singdollar notes maturing in March 2020.

Since Tuesday, three Singapore landlords - Mapletree Logistics Trust, Cache Logistics Trust and AIMS Apac Reit - have come out to say that CWT, one of their top tenants, has been up to date on its rental payments.

Separately, CWTI's default on Tuesday has triggered a cross default to an unnamed subsidiary, and if the lenders take actions to enforce their rights, this could result in a change of control of CWT.

However, CWTI has noted that as at end-2018, its net assets amounted to HK$5.3 billion, and it has total assets of HK$24.6 billion, which is more than the debts it owes.