New World raises creditor support on overseas debt swap

[HONG KONG] Hong Kong developer New World Development, the poster child of the city’s distressed property sector, received additional bondholders support in its debt swap plan as the second early bird deadline closed, a filing showed.

Investors tendered a total of US$185 million of its perpetual bonds and US$39.5 million regular notes during the second early deadline of Nov 25.

Stung by a property slump in Hong Kong and mainland China, New World has been struggling with its debt. The swap is the company’s latest move to ease liquidity stress stemming from the years-long downturn. The company completed a record US$11 billion loan deal in June and secured a HK$3.95 billion (S$508 million) loan backed by its crown jewel asset, Victoria Dockside, in September.

Under the swap plan, New World has offered to issue up to US$1.8 billion of perpetuals, expanding from an original US$1.6 billion after an initial early deadline of Nov 17, in exchange for its old notes at a price of 50 cents on the US dollar. That means it could buy back as much as US$3.58 billion of outstanding notes. It also proposed a debt swap for some of its conventional bonds, at a lower haircut.

Last week, the company said that it had reduced its perpetual bond debt by US$1.02 billion as about US$2.09 billion of the securities had joined the swap by the Nov 17 deadline.

The general deadline falls on Dec 2 at 11.59 pm New York time, giving perpetual bond holders until then to receive US$50 more for each US$1,000 in deferred interest and principal on the existing notes than in the original base offer. BLOOMBERG