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Tuesday, 16 December 2008
Bio-Treat Acts on Loan Default Notice
Bio-Treat Technology’s entire group assets have now been pledged in favour of Precious Wise Group - following the lender’s serving of a notice of default relating to a HK$360 million loan facility.
Bio-Treat Technology’s entire group assets have now been pledged in favour of Precious Wise Group - following the lender’s serving of a notice of default relating to a HK$360 million loan facility.
The Chinese water-treatment company said this in an update on the loan repayment default. Precious Wise was a substantial shareholder with a stake of 29.79 per cent in Bio-Treat when it granted the group the facility in January. It disposed of its stake in November.
‘Precious Wise has invoked its rights to secure Bio-Treat’s pledged assets until full payment of the outstanding loan has been made,’ Bio-Treat chief financial officer Alan Lau told BT yesterday. ‘Bio-Treat is in advanced discussions with its financial stakeholders but drastic changes in credit conditions have impeded progress to secure additional financing.’
Full payment of the HK$360 million loan facility was due in 2013. Bio-Treat used HK$309.4 million of the facility and subsequently made a HK$70 million partial repayment, according to its FY2008 annual report. Then after June 30, its financial year-end, the group utilised another HK$35 million and the principal sum of the outstanding loan was HK$274.41 million.
Default on the loan was triggered by a default in Bio-Treat’s convertible bonds (CB) programme. Based on the loan agreement, any default on other loans owed by Bio-Treat constitutes a default on the shareholder loan.
Following the receipt of the default notice, Bio-Treat last Tuesday pledged its entire assets as security for the repayment of the outstanding loan. Under the share charge, a fixed first charge over the shares held by the company in several group companies was created in favour of Precious Wise, so all dividends, interest and distributions arising from these shares will be assigned to Precious Wise.
Some analysts told BT it is unclear if Precious Wise is entitled to sell Bio-Treat’s assets. Bio-Treat’s lawyers were not available for comment. Mr. Lau told BT Bio-Treat is of the view that its water-treatment plants are still fully owned by the group and Precious Wise needs the court’s approval to sell any assets. He added that Precious Wise has acknowledged that the current credit conditions warrant a reassessment of the repayment schedule.
‘Discussions on this matter remain fruitful, and Bio-Treat remains confident that a practical approach will be achieved soon,’ Mr. Lau said.
Bio-Treat had in April received notices of default from some CB holders who had exercised put options on Jan 18 under a $206 million CB programme due in 2013. Some $116.4 million of the CBs in nominal value had to be redeemed on Jan 18, which amounted to $126.6 million including interests payable. Bio-Treat had repaid a partial sum and is seeking refinancing for the outstanding $86.6 million.
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Bio-Treat Acts on Loan Default Notice
By LYNETTE KHOO
16 December 2008
Bio-Treat Technology’s entire group assets have now been pledged in favour of Precious Wise Group - following the lender’s serving of a notice of default relating to a HK$360 million loan facility.
The Chinese water-treatment company said this in an update on the loan repayment default. Precious Wise was a substantial shareholder with a stake of 29.79 per cent in Bio-Treat when it granted the group the facility in January. It disposed of its stake in November.
‘Precious Wise has invoked its rights to secure Bio-Treat’s pledged assets until full payment of the outstanding loan has been made,’ Bio-Treat chief financial officer Alan Lau told BT yesterday. ‘Bio-Treat is in advanced discussions with its financial stakeholders but drastic changes in credit conditions have impeded progress to secure additional financing.’
Full payment of the HK$360 million loan facility was due in 2013. Bio-Treat used HK$309.4 million of the facility and subsequently made a HK$70 million partial repayment, according to its FY2008 annual report. Then after June 30, its financial year-end, the group utilised another HK$35 million and the principal sum of the outstanding loan was HK$274.41 million.
Default on the loan was triggered by a default in Bio-Treat’s convertible bonds (CB) programme. Based on the loan agreement, any default on other loans owed by Bio-Treat constitutes a default on the shareholder loan.
Following the receipt of the default notice, Bio-Treat last Tuesday pledged its entire assets as security for the repayment of the outstanding loan. Under the share charge, a fixed first charge over the shares held by the company in several group companies was created in favour of Precious Wise, so all dividends, interest and distributions arising from these shares will be assigned to Precious Wise.
Some analysts told BT it is unclear if Precious Wise is entitled to sell Bio-Treat’s assets. Bio-Treat’s lawyers were not available for comment. Mr. Lau told BT Bio-Treat is of the view that its water-treatment plants are still fully owned by the group and Precious Wise needs the court’s approval to sell any assets. He added that Precious Wise has acknowledged that the current credit conditions warrant a reassessment of the repayment schedule.
‘Discussions on this matter remain fruitful, and Bio-Treat remains confident that a practical approach will be achieved soon,’ Mr. Lau said.
Bio-Treat had in April received notices of default from some CB holders who had exercised put options on Jan 18 under a $206 million CB programme due in 2013. Some $116.4 million of the CBs in nominal value had to be redeemed on Jan 18, which amounted to $126.6 million including interests payable. Bio-Treat had repaid a partial sum and is seeking refinancing for the outstanding $86.6 million.
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