New | Coal producer Up Energy defaults on convertible bonds as coking coal prices tumble

Up Energy Development Group, a Hong Kong-listed producer of coking coal used in steel smelting, has defaulted on convertible bonds, becoming the latest company in China’s coal industry to renege on obligations after prices of the fuel plunged.

The company failed to repay HK$3.17 billion worth of convertible notes by Thursday, the grace-period deadline after missing payment by the January 18 maturity date, according to a filing to the Hong Kong Stock Exchange on Friday.

That gives holders of other debt totaling HK$3.46 billion, including HK$2.53 billion of convertible notes due in 2018 to its controlling shareholders, the right to demand immediate repayment under a cross-default clause, it said.

Prices for hard coking coal have fallen 43 per cent since the beginning of 2014. Winsway Enterprises Holdings, a Chinese coking-coal importer, missed interest payment for the second time in October on a debenture due 2016.

Coal miner Hidili Industry International Development didn’t repay dollar-denominated bonds due in November.

Up Energy, which posted a net loss of HK$361.4 million on revenue of HK$82.9 million for last year’s first-half due to ballooning finance costs and plunging sales, is discussing with its creditors to restructure its debt or reach a standstill agreement with the creditors not to take enforcement action, the filing said.