Event Publicly Available Information:
The Asia Ex-Japan DC concluded that a Failure to Pay Credit Event had occurred with respect to the Reference Entity and the date of the Failure to Pay Credit Event was 29 November 2021. Further information is set out in the column to the right.
Set out below is the DC Question that was raised and the related Publicly Available Information.
The Eligible Market Participant that raised the General Interest Question requested that the AEJ DC consider and determine whether a Failure to Pay Credit Event has occurred in respect of China Aoyuan Group Limited (the Reference Entity) pursuant to the USD150,000,000 Facility Agreement dated 17 March 2021 between King World Holdings Limited as Borrower, the Reference Entity as Guarantor and China Construction Bank (Asia) Corporation Limited as Agent and Security Agent (the Facility Agreement).
The Eligible Market Participant submitted the following information in respect of its submission. The below information and comments were provided by the Eligible Market Participant and are not statements of the Asia Ex-Japan Determinations Committee.
A copy of the Facility Agreement and information and notices relating to the facts and circumstances of the non-payment received from China Construction Bank (Asia) Corporation Limited as Agent under the Facility Agreement are published on Bloomberg and can be publicly accessed by any subscriber by running the function “{BF3785560 Corp CF <GO>}” on a Bloomberg Terminal. The Eligible Market Participant noted that pursuant to Section 1.35(a)(ii) of the 2014 Definitions, information and notices received from the Agent under the Facility Agreement are Publicly Available Information.
The Eligible Market Participant that submitted the General Interest Question has set out the following events and timeline in support of its question. As noted above, this information has been provided by the Eligible Market Participant.
"Capitalised terms used hereunder have the meaning ascribed to them in the Facility Agreement. A Rating Downgrade (Repayment) Event occurred under clause 7.2 (Mandatory prepayment) of the Facility Agreement, following which the Agent demanded the Borrower to pay all outstanding Loans, together with accrued interest, Makewhole Amount and all other amounts accrued under the Finance Documents (total amount due being USD156,114,166.66, the "Mandatory Prepayment Amount") by 17 November 2021 (the "Original Mandatory Prepayment Date") pursuant to clause 7.2(a)(ii) of the Facility Agreement.
Fitch’s announcement of rating downgrade of China Aoyuan: https://www.fitchratings.com/research/corporate-finance/fitch-downgrades-china-aoyuan-group-to-b-removes-from-uco-outlook-negative-03-11-2021
Public announcement by the Reference Entity on Hong Kong Stock Exchange: https://www1.hkexnews.hk/listedco/listconews/sehk/2021/1202/2021120202488.pdf
The Original Mandatory Prepayment Date was subsequently extended to 22 November 2021 with all Lenders’ consent. But on 22 November 2021, the Agent did not receive any payment from the Borrower. On 23 November 2021 following the Borrower’s failure to pay, the Agent demanded the Reference Entity as guarantor to immediately pay the Mandatory Prepayment Amount on 23 November 2021 pursuant to clause 16 of the Facility Agreement. The Agent did not receive any payment from the Reference Entity on 23 November 2021 and further confirmed on 6 December 2021 that the Borrower and the Reference Entity as guarantor had not paid the Mandatory Prepayment Amount. Any potential grace period under the Facility Agreement has expired. Payment of the Mandatory Prepayment Amount was due and payable by the Reference Entity on 23 November 2021 pursuant to clause 16 of the Facility Agreement. Clause 21.1 of the Facility Agreement provides that a non-payment event of default will occur if the Reference Entity does not pay on the due date any amount payable under the Facility Agreement unless (a) its failure to pay is caused by (i) an administrative or technical error; or (ii) a Disruption Event (as defined in the Facility Agreement); and (b) payment is made within three Business Days (as defined in the Facility Agreement) of its due date."