UPDATE 5: Trustee of Tsinghua Unigroup Guaranteed USD Bonds Says It Has Received CNY 24.5M Interest Payment of Retained Debt Portion

UPDATE 5: 3:50 a.m. ET 1/25/2024: Citicorp International, trustee for Tsinghua Unigroup’s $200 million 6.5% guaranteed bonds due 2028 issued by Tsinghua Unic Ltd., sent a notice to bondholders stating that on Jan. 15, the trustee had received CNY 24.5 million ($3.5 million) net amount of the eighth interest payment in respect of the retained debt portion of the trustee’s claim under the company’s restructuring plan, according to a copy of the notice dated Jan. 23 seen by Reorg.

The funds received are after deductions for applicable PRC taxes, including PRC withholding taxes, according to the notice.

The total funds to be distributed to bondholders will be $3.4 million, the notice states. The trustee informed bondholders that, as per previous notices, funds received by the trustee in CNY pursuant to recovery under the restructuring plan will be exchanged into USD prior to application of such funds.

The trustee said in the notice that it will shortly distribute the net total distribution amount to bondholders. Of this distribution, $2.8 million will be applied towards payment of principal (as of Jan. 15, 2023) and $622,952 will be applied towards interest owing in respect of the bonds (as of Jan. 15, 2023), according to the notice.

---

UPDATE 4: Trustee of Guaranteed Notes Says It Has Received RMB 2.8B Non-Retained Debt Portion Payment, RMB 41.8M Second Interest Payment From Tsinghua Unigroup

UPDATE 4: 6:51 a.m. ET 7/20/2022: Citicorp International, trustee for Tsinghua Unigroup’s $900 million 4.75% guaranteed bonds due 2021 issued by Tsinghua Unic Limited, sent a notice to bondholders that the trustee had received RMB 2.835 billion ($419.9 million) in respect of the non-retained debt portion of the trustee’s claim on July 12.

No deduction for PRC taxes had been applied in respect of the non-retained debt received, according to the notice, dated July 15, seen by Reorg.

The trustee also had received RMB 41.8 million in respect of the net amount of the second interest payment, the notice shows.

The trustee said it is considering the application of the funds received and will inform bondholders of the conversion of such funds into U.S. dollars and the application of such funds in further notice.

---

UPDATE 2: Tsinghua Unigroup Makes RMB 41.8M First Interest Payment to Trustee of Guaranteed Notes; Onshore Creditors Receive Stock Payments; Co. Expects to Collect Cash Payments Within Next Few Days

UPDATE 2: 7:06 a.m. ET 7/6/2022: Citicorp International, trustee for Tsinghua Unigroup’s $900 million 4.75% guaranteed bonds due 2021 issued by Tsinghua Unic Limited, sent a notice dated June 28 to holders stating that the trustee has received RMB 41.8 million ($6.2 million) net amount of the first interest payment in respect of the retained debt portion of the trustee’s debt claim under Tsinghua Unigroup’s restructuring plan, according to two sources familiar with the matter and a copy of the notice viewed by Reorg.

Funds received by the trustee in RMB will be exchanged into U.S. dollars prior to application of such funds by the trustee pursuant to the terms of the trust deed, and the actual amount to be received by bondholders will be subject to the applicable exchange rates and costs associated with such exchange, according to the notice.

The trustee expects to withhold a material amount from the funds received or to be received, to be applied towards the costs, charges and expenses properly incurred, including the costs of its legal advisors, the notice shows.

Unigroup also notified the trustee on June 28 that it will arrange for the payment of the portion of the trustee’s claim which will not form part of the trustee’s retained debt in accordance with the terms of the restructuring plan, according to the notice.

Onshore, creditors have received the related stock payments in relation to the debt-to-equity swap option under the restructuring plan, said the same two sources.

Creditors are also expected to receive the cash payment under the restructuring plan within the next few days, the sources added.

---

UPDATE 1: Tsinghua Unigroup Says to Pay Funding Under Restructuring Recovery Option in RMB to Offshore Account Nominated by Trustee of Its Guaranteed Notes; Citicorp to Pay Holders in Dollars

UPDATE 1: 4:11 a.m. ET 6/2/2022: Citicorp International, the trustee for Tsinghua Unigroup’s $900 million 4.75% guaranteed bonds due 2021 issued by Tsinghua Unic Limited, sent another notice to holders on May 30 that Tsinghua Unigroup confirmed to the trustee on May 13 that funding to be paid pursuant to the recovery options under Unigroup’s restructuring plan will be paid in RMB to an offshore account nominated by the trustee, according to two sources familiar with the matter and a notice viewed by Reorg.

Funding received by the trustee in its capacity under the trust deed will be held by the trustee while payments to be received in RMB pursuant to the recovery option will be exchanged into U.S. dollars prior to any payment to holders, the notice shows.

The exchange rate will be determined at the time of the exchange while the actual amount which holders may receive will be subject to fluctuations in the applicable exchange rates.

Unigroup had further provided details of the repayment payment in respect of the third recovery option under the company’s restructuring plan, adding that the bankruptcy administrator had accepted RMB 4.25 billion ($637.1 million) principal for retained debt.

As reported, the third recovery option involves 40% cash payment within six months and the remaining debt claims extended for eight years.

In relation to the ongoing litigation between Citicorp and Unigroup as Unigroup applies to stay Hong Kong keepwell proceedings, Unigroup had sent another notice to the trustee on May 18 adding that it may seek judicial assistance and protection from Beijing No.1 Intermediate People’s Court and adjust the implementation of the restructuring plan accordingly if Citicorp’s legal actions had imposed any negative impacts on the company or impeded the execution of the restructuring progress, according to the notice.

Unigroup added that it wishes to continue negotiating with Citicorp to come to a satisfactory resolution.

 

---

Original Story 6:40 a.m. UTC on April 19, 2022

Citicorp Sends Notice to Tsinghua Unigroup’s Guaranteed Bondholders; Unigroup Says to Pay Funding Under Recovery Options in RMB to Onshore Account; Trustee May Not Use Onshore Funding to Pay Holders Without SAFE Permission

Citicorp International, the trustee for Tsinghua Unigroup’s $900 million 4.75% guaranteed bonds due 2021 issued by Tsinghua Unic Limited, sent a notice to holders on April 14, detailing that Tsinghua Unigroup informed the trustee on April 2 that the funding to be paid pursuant to the recovery options under Unigroup’s restructuring plan will be paid in RMB due to the restructuring process being a mainland China court procedure, according a source familiar with the matter and a notice viewed by Reorg.

In response to the instructions made by Unigroup, Citi said that if it were to receive any funds onshore, it would not be able to use the funds to pay sums owing under the trust deed in the absence of permission from the State Administration of Foreign Exchange, or SAFE, and that it cannot assure to receive or remit the funds offshore to make payment to bondholders.

The guarantor of the bond, Tsinghua Unigroup, said it is under no obligation to undertake any foreign currency exchange in relation to the recovery option funds, and that the trustee should provide an onshore RMB account for receipt of the funds according to applicable SAFE regulations, the notice details.

In the event a creditor is unable to receive the funds due to reasons attributable to such creditor, such creditor shall be responsible for the resulting legal consequences, and such funds shall be placed in a bank account designated by the bankruptcy administrator in accordance with Tsinghua Unigroup’s restructuring plan, according to the notice.

Citicorp said in the notice that its representative has been seeking additional information from the administrator and Tsinghua Unigroup in order to ascertain the basis upon the payment of the recovery options into an onshore account and which SAFE regulations impose restrictions upon payment to offshore accounts.

As of the date of the notice, the trustee’s representative has been unable to obtain such information and continues to engage with the administrator and the guarantor, as detailed in the notice.

Onshore, creditors received the interest payment due on April 14 under Unigroup’s restructuring plan, said a second source and a third source familiar with the matter.

The strategic investors’ consortium for Tsinghua Unigroup has deposited the strategic investment, about RMB 60 billion ($9.414 billion), to an escrow account co-managed by the bankruptcy administrator and the strategic investors, said the second and third source.

Recovery Options

According to the notice, holders of the $900 million 4.75% guaranteed bonds will be subject to recovery option three under the company's restructuring plan. This involves 40% cash payment within six months and the remaining debt claims extended for eight years.

Pursuant to the proposed timeline in Tsinghua Unigroup’s restructuring plan, unsecured creditors would have 10 working days following the court’s approval of the plan to select their preferred recovery option or be deemed to have selected option three in the absence of any selection within the deadline.

After the court approved the restructuring plan on Jan. 14, the trustee Citicorp International had not been instructed to convene a bondholder meeting to select a preferred recovery option as of Jan. 19, resulting in the trustee unable to obtain instructions from bondholders to select the recovery option prior to the deadline, the notice states.

Tsinghua Unigroup declined to comment.

Below is Tsinghua Unigroup’s capital structure: