Deals
One of China's Biggest Defaulters Has a $10 Billion Plan and It's Scaring Investors
- Coal miner moves to commingle a subsidiary’s dollar bonds
- Success may mean investors need yet further due diligence
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A move by one of China’s biggest corporate delinquents to include bonds sold by a healthier subsidiary in a workout proposal has stoked concerns about creditors’ rights in a market still getting used to the concept of defaults.
Coal miner Wintime Energy Co. by mid-2018 found itself incapable of servicing debt that quadrupled in less than five years. Now it’s proposing the inclusion of a $500 million note sold by Huachen Energy Co. in a 70 billion yuan ($10 billion) overall restructuring package. Huachen hasn’t defaulted on those offshore notes, and bundling them together with the obligations of its more sickly parent could appeal to Wintime creditors.