Lai Sun Development (0488) announced on Monday the launch of an exchange offer and consent solicitation for its existing 5 percent guaranteed notes, which are due on July 28, with an outstanding principal of US$493 million (HK$3.85 billion).
The company said the move aims to alleviate its short-term liquidity pressure, providing it with additional time to maximize asset value realization and implement an orderly deleveraging in the current challenging commercial real estate market.
It noted that the transaction is structured to align with noteholders’ interests by enhancing repayment terms through upfront repayment and new notes, with the objective of securing broad noteholders’ support and achieving a mutually beneficial outcome.
According to Lai Sun, noteholders who vote in favor of the transaction will benefit from: 30 percent cash upfront repayment of principal on the settlement date of 28 July 2026, or no later than 28 September 2026 upon completion of the disposal of the company’s interest in 3 Connaught Road Central properties together with accrued and unpaid interest on the existing notes, as partial exit; exchange of the remaining principal amount of the existing notes into new notes with a 3-year tenor and an increased annual coupon of 8 percent; entitlement to an early consent fee of 1 percent (reducing to 0.25 percent after the early consent deadline); and cash sweep mechanism under the terms of the new notes, under which net proceeds from the company’s sale of specified assets (including five Hong Kong residential and UK investment properties) will be deposited into a designated account to ensure transparency and ring-fenced for early redemption of the new notes.
The company invited noteholders to vote in favor of approving certain amendments and waivers in respect of the existing notes, including an extension of the maturity date to 28 July 2029.
The early consent deadline is 4:00 p.m. (London time) on 29 June, while the final voting deadline is 4:00 p.m. (London time) on 7 July. The transaction is expected to settle and become effective on or around 28 July.
