Mixed response to GDE debt plan

PUBLISHED : Thursday, 13 January, 2000, 12:00am
UPDATED : Thursday, 13 January, 2000, 12:00am

Creditors of insolvent Guangdong Enterprises (Holdings) (GDE) have indicated they are pleased with the asset-value structure of the company's latest debt-restructuring plan.

However, bankers at yesterday's creditors' meeting complained about receiving insufficient details about Dongshen Water Supply, a GDE asset.

'The good thing is the package of instruments was valued at the market price,' one banker said.

'But the bad thing is we were not given many details about Dongshen Water, which makes it difficult to assess the proposal,' he said.

About 120 creditor banks attended the meeting organised by the steering committee appointed to represent them.

During the meeting, bankers were given details of the US$5.59 billion restructuring proposal.

Under the plan, the liabilities of GDE, Nam Yue and Guangnan (Holdings) would be restructured so creditors received a package of new debt, cash and equity, such as the 19 per cent interest in the water project.

Bankers said that HK$14 billion of new debt issued by Dongshen Water would be received by creditors at the London interbank offered rate plus 8 per cent so they would not incur direct losses.

Some bankers said it was difficult to assess the risks involved in the new package and the provision level to be made because so few details about the valuation of the water project were made available.

Nonetheless, most bankers said the latest restructuring package was better than previous ones.

Under the new plan, they said creditors would have a chance to share the upside potential of assets.

Standard Chartered Bank, the liaison bank of the committee, said Dongshen Water - which provides Hong Kong with most of its water supply - would be privatised.

'There will be an asset appreciation when the water project is listed,' a banker said.

'Therefore, banks will benefit.' A series of meetings will be arranged with banks by the steering committee to collect additional feedback from them.

Analysts said yesterday they expected creditors to eventually accept the latest restructuring plan.