Founder’s creditors agree to reprieve on $285 million bond

Creditors of Peking University Founder Group agreed to extend the payment deadline on a RMB 2 billion ($285 million) bond for two months after the Chinese conglomerate defaulted earlier this month, reported Caixin.

A group of 23 bondholders voted to allow the company to extend the principal payment deadline on the bond until Feb. 21, 2020, Founder Group said Monday in a statement. The company agreed to pay interest at the original coupon rate of 4.94% during the extension and to pledge the shares it owns in Bank of Chongqing as guarantee. Founder Group owns 3.02% of the Hong Kong-listed regional bank, which was worth about RMB 393 million as of Monday.

Founder Group failed to make interest and principal payments due Dec. 1, but it had a 15-day grace period. According to the terms of the bond, if the company couldn’t repay by Monday, it would trigger cross-defaults on the company’s offshore dollar bonds.

The extension mainly aims to avoiding the cross-defaults while giving the company more time to bring in strategic investors or carry out a restructuring, a bond investment manager told Caixin. It’s still hard to predict whether the bond can be paid after the extension, the manager said.