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GCL-Poly cross defaults over unpaid $500m senior notes

Creditors refused to postpone payment of the three-year notes for another 36-month term and now face receiving less than 5% of the amount due once a proposed debt restructure is completed, with the balance kept back until January 2024 regardless.

Chinese polysilicon manufacturer GCL-Poly has gone into cross-default after failing to honor US$500 million worth of three-year senior notes issued on the Hong Kong exchange which matured on Saturday.

The company this morning confirmed it had failed to secure the permission of 90% of holders of the notes to swap them for fresh three-year investments, triggering a default and a cross default at the heavily indebted solar project unit of the business.

GCL will now press ahead with plans to restructure its debts, including by paying out less than 5% of the monies due from the senior notes for the time being.

Appeal

The company today made a fresh appeal to the note holders who refused to postpone payment of their investments in time to meet a twice-extended deadline which expired on Friday afternoon.

GCL now wants the investors to support a proposed restructure of company debts which would see them receive US$50 for every US$1,000 of notes held plus a pro rata share of a US$17.8 million fund to be divided among the creditors. Under the terms of the restructure – which would allocate a further US$4.5 million specifically to cover the fees of Houlihan Lokey, Hogan Lovells and Moorlander Consulting Limited as advisors to some of the creditors – payment of the outstanding balance due from the notes would be extended until January 30, 2024 anyway, with the defaulted investments exchanged for fresh, 10%, three-year notes.

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The note holders have until next Monday to support the proposed restructure – termed the Bermuda scheme in reference to where the company is registered – and GCL today said it has received commitments from the holders of 53% of the investments to support the plan and is confident of it being approved.

In terms of the cross-default non-payment of the notes triggered on Saturday, GCL-Poly and its GCL New Energy solar project development subsidiary said today: “As of the date of this joint announcement, the company has not received any request or notice demanding immediate repayment of its debts under other indebtedness.”

News of the default followed the announcement on Friday of another RMB218 million (US$33.7 million) injection of public money for GCL from the sale of a 50 MW solar project in China to the Beijing United Rongbang entity ultimately controlled by state-owned energy company Beijing Energy Holding Co Ltd.

That project windfall consisted of a sale price of RMB52.5 million which booked an estimated loss of RMB21 million, plus related receivables for GCL from the unit sold.

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Source: pv magazine