12 September 2023

Kwok Yih & Chan has recently successfully completed a complex multi-jurisdictional debt restructuring for Hidili Industry International Development Limited (“Hidili”) involving offshore debts governed by New York law and onshore debts governed by PRC law.

Hidili is principally engaged in coal mining, manufacture and sale of raw coal and clean from its coal mines located the PRC and is one of the leading suppliers of imported coking coal into mainland China. It was incorporated in the Cayman Islands and is listed on the Main Board of the Hong Kong Stock Exchange. Hidili issued the US$400 million of New York law governed notes in 2011 which were listed on SGX and its operations in the PRC are funded by the PRC banks.

As a result of a low production volume since 2014 due to mining consolidation, environmental restrictions and a fall in the market price of clean coal due to a decrease in the market demand and low commodity cycle, Hidili lacked cashflow to redeem the above notes and repay the borrowing from the PRC lenders. Hidili subsequently appointed advisers to explore solutions to restructure the Group’s debts to its noteholders and PRC lenders totalling approximately USD1,537 million.

Under the debt restructuring plan, noteholder claims were restructured and were implemented by a scheme of arrangement in Hong Kong pursuant to which new shares, zero-coupon bonds and cash payments were issued to the noteholders. The Hong Kong scheme of arrangement, with the overwhelming support of scheme creditors, were sanctioned by the Hong Kong court in June 2022.  A recognition order to give effect to the terms of the Hong Kong scheme of arrangement was obtained from the US Bankruptcy Court in New York under Chapter 15 of the US Bankruptcy Code in July 2022.

“The debt restructuring is complex due to the multi-jurisdictional aspects of the New York law governed offshore debts which was completed via sanction of the Hong Kong Court together with a parallel Chapter 15 recognition order under the US Bankruptcy Code for a Cayman Island incorporated company listed on the Hong Kong Stock Exchange. We have been working on this for over many years and I have to thank our team for their unfailing and dedicated efforts to finally close this restructuring exercise.” Conrad Chan, a founding partner of Kwok Yih & Chan, said.

The team was led by Conrad Chan and Leon Saw, who are the firm’s capital markets & corporate finance partners and also Clinton Tsang, the firm’s insolvency, liquidation and restructuring partner.  They were supported by Michelle Liu, Edki Sek, Rachel Lai and Catherine Lau.