Winsway Shares Plunge 40 Percent as White Knight Hopes FadeDavid Yong and Joshua Fellman
Winsway Enterprises Holdings Ltd., which defaulted on dollar bonds last month, plunged the most in almost five years after talks seeking new capital from some investors failed.
While other parties are still assessing opportunities, there was no guarantee of a deal, the Chinese coking-coal importer said in an exchange filing Monday. It remains in talks with bondholders and has extended a debt standstill pact with some of them for a third time, to July 20. The shares fell as much as 40 percent in Hong Kong trading.
Winsway became the second Chinese dollar-bond issuer to default this year when it missed a $13.15 million coupon on May
8. China’s economic slowdown has caused a slump in commodity prices from iron ore to copper, with coking coal declining two-thirds from its peak in 2011. Sixteen of the 58 defaults globally in 2014 were among companies in natural resources, Standard & Poor’s said in a January report.
“No agreement has been reached with any potential investors and discussions with certain investors have now ceased,” the company said in Monday’s filing.
Winsway shares fell HK$0.16, or 34 percent, to HK$0.315 at 10:19 a.m. in Hong Kong in their first session of trading since a June 8 suspension. They earlier fell as low as HK$0.285.
The company’s 8.5 percent April 2016 bonds rose 0.8 cent to
29.52 cents on the dollar, after slumping to a record-low 24.84 on May 29. They traded around 38 cents at the end of 2014.
Winsway is asking bondholders to take unspecified losses on the notes while it seeks new equity investors and loans from banks, the company said in its annual report published in April. It’s considering a debt-to-equity swap, or a maturity extension and interest rate reduction, Beijing-based company spokeswoman Laura Shi said earlier this month. She didn’t answer two calls to her mobile phone in Beijing on Tuesday.
“We have a white knight, which is still doing due diligence and getting the necessary approvals,” Shi said on June 5, without elaborating. “We understand bondholders will still want time to scrutinize our accounts.”
The company is paring its stake in Canadian coal-mining unit Grande Cache Coal Corp. and selling it to Hong Kong-listed UP Energy Development Group Ltd. for a cash consideration of $1 because the capital expenditure needed to continue was too much, Chairman and controlling shareholder Wang Xingchun said in the annual report.
The completion deadline for the Grande Cache disposal was extended to June 30 as the parties seek more time to satisfy conditions, according to a stock exchange filing in May.
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