CWT International faces seizures after loan default; unit has $100m in SGD bonds due Thursday

HONG KONG (BLOOMBERG) - CWT International Ltd, controlled by HNA Group Co, failed to pay interest on a HK$1.4 billion (S$241.7 million) facility, prompting lenders to demand immediate repayment of the loan, the company said on Tuesday (April 16).

The Hong Kong-listed company will have to make good on the payment by 9am on Wednesday, April 17, to prevent lenders from taking action, it said in a statement to the Hong Kong stock exchange. Failure to settle the loan by then will allow the creditors to take possession of all charged assets, including its shareholding of CWT Pte, properties in the UK and the US, and golf courses in China, it said. The charged ones represent a "vast majority" of its total assets, which stood at HK$24.6 billion as of end-2018.

CWT International's parent HNA Group was one of China's most acquisitive companies until it began facing liquidity challenges and pressure from the government. The conglomerate has agreed to sell more than US$25 billion of assets ranging from property to big shareholdings since 2018. Despite that, it still struggles to repay debt. The group repaid a local note after a delay last month.

CWT International, engaged in logistics and financial services, has been actively negotiating with the lenders to work out other arrangements for the repayment due under the facility agreement, it said. The default, however, led to a cross default under a term loan facility, which has about HK$766 million outstanding, it said. Trading in CWT International shares remained suspended.

CWT Pte, a unit under CWT International, has a S$100 million note due on Thursday and another bond of the same amount due March next year, according to Bloomberg-compiled data. An auditors' report contained in CWT International's 2018 annual results said there could be "material uncertainties" within the firm that "may cast significant doubt on the Group's ability to continue as a going concern."

"We hold the view that CWT Pte will pay its Singapore dollar bonds due on April 18 as CWT Pte holds assets and has on-going businesses," said Ezien Hoo, a credit analyst at Oversea Chinese Banking Corp. "But its parent defaulting may complicate the process and there may be delays."