Chinese coal importer Winsway Coking Coal Holdings Ltd had agreed to buy back its debt for as low as a third of its original price after its bondholders agreed to a material amendment in the deal. Winsway Coking provides coal products to steelmakers in China.
The company's bondholders tendered USD153.6 million worth of debt, roughly 33% of its original value on the outstanding 8.5% notes maturing on April 2016 for Winsway's repurchase. This transaction was confirmed by a regulatory statement filed with the Hong Kong stock exchange yesterday.
About 68,6% of bondholders agreed to changes to the bond covenants after it was warned by Moody's Investors Services that the said bonds only had a liquidity buffer of less than three months from September. The amendments include modification of buyback terms and extension of deadlines. The deal was approved since it surpassed the 50% approval requirement.
Winsway's stock value declined by as much as 72% from its January high. It offered a mere 32.5% of the debt value to buy back the bonds last August 20. In a document sent out to its bondholders obtained by Bloomberg, the company said the buyback "is expected to provide a better recovery rate for the holders than in liquidation."
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