China Fishery faces bond hurdle on S$1.5 billion debt

SINGAPORE — China Fishery Group, the Singapore-listed industrial fishing giant, faces a second deadline today as it seeks bondholder approval to let its unit in Peru guarantee as much as US$1.2 billion (S$1.5 billion) of debt.

China Fishery is pushing for Corporacion Pesquera Inca SAC, its Lima-based unit better known as Copeinca, to back obligations including US$650 million of credit lines from five lenders, US$300 million of its July 2019 bonds and future borrowings, company filings showed. That would require a majority of holders of Copeinca’s US$250 million notes due February 2017 agreeing to relax the bonds’ covenants, said the consent solicitation document.

“It’s very negative for bondholders to consent to this because Copeinca is now going to represent basically the vast majority of China Fishery’s earnings and it has the least amount of debt,” said BCP Securities analyst Mariela Anguiano.

Standard & Poor’s ratings agency last week cut China Fishery and Copeinca’s ratings by one level to B, or five steps below investment grade, and put both on negative watch because of the risk the debt cannot be refinanced.

Copeinca bondholders are being offered US$10 for every US$1,000 in face value of bonds as an incentive to consent to the covenant changes. If the minimum number, or 50.1 per cent, of bondholders agree, that will cost the company US$1.25 million. China Fishery had set an original consent deadline of July 30, but extended it until 5pm New York time yesterday (5am Singapore time today).

China Fishery spent more than US$782 million taking over Copeinca last year, giving it control of the biggest anchovy quota holder in Peru and the world’s third-largest fish meal producer. The purchase was partly funded by loans which lenders say must now be guaranteed by Copeinca. Based on its US$2.5 billion of assets at the end of March, Copeinca accounted for at least 90 per cent of the group’s total assets and earnings, company filings show. BLOOMBERG