China Bank Guarantor Pays Distressed Tewoo’s Bond Interest

(Bloomberg) -- A Chinese bank that backed Tewoo Group Co.’s dollar bond made an interest payment on its behalf, in a sign of worsening finances at the distressed commodities trader.

Industrial and Commercial Bank of China Ltd. transferred $7.875 million to repay interest due December 1 on Tewoo’s $500 million dollar bond due 2020, the company said in a filing to the Singapore stock exchange on Tuesday. ICBC had provided a standby letter of credit (SBLC) on the note -- which is effectively a pledge to repay if the borrower can’t.

This is the first such payout since June on an offshore bond from a SBLC provider, when troubled conglomerate China Minsheng Investment Group Corp. received a similar backstop from China Construction Bank Corp.

Tewoo has five other outstanding dollar bonds with combined principal amount of $1.55 billion, which are without SBLC providers. That includes a $300 million bond due on December 16. The company has managed to pay its offshore debt so far but its subsidiary Tianjin Hopetone Co. missed a coupon payment on its 1.21 billion yuan note in July.

The company said earlier this month that it will appoint Tianjin Jincheng State-owned Capital Investment and Management Co. to manage its offshore debt. The company plans to take a series of debt management measures, including an exchange offer, it said without elaborating on the steps.

To contact Bloomberg News staff for this story: Ina Zhou in Hong Kong at hzhou179@bloomberg.net;Tongjian Dong in Shanghai at tdong28@bloomberg.net

To contact the editors responsible for this story: Neha D'silva at ndsilva1@bloomberg.net, Magdalene Fung

©2019 Bloomberg L.P.

With assistance from Bloomberg