BreadTalk seeks approval to waive breach of $100m notes

It would like to change the Consolidated Tangible Net Worth covenant to not less than $50m.

BreadTalk has commenced a consent solicitation exercise to seek the approval of noteholders in amending the agreements related to the company’s breach of financial covenants involving $100m 4% fixed rate notes that were due by 2023, said in its bourse filing.

The consent solicitation is said to be by way of extraordinary resolution.

The company has declared in its financial statement for FY2019 in February that it has committed a technical breach of financial covenants due to the decrease in the company’s accumulated profits.

Through the consent solicitation, the company wishes to waive the said breaches of the Consolidated Tangible Net Worth covenant and the Consolidated Total Borrowings to Consolidated Tangible Net Worth covenant.

The company seeks to change the Consolidated Tangible Net Worth covenant to not less than $50m, from the quarter ending 30 June 2021 onwards. It also wishes to amend the Consolidated Total Borrowings (Net of Cash) to Consolidated Tangible Net Worth covenant to not more than 3.5:1, for the same period, from the quarter ending 30 June 2021 onwards.

Breadtalk said that it would like to unify the financial covenant definitions to that of the Company’s 2019 MTN Programme, to exclude the SFRS(I) 16 effects from the computation of the financial covenants.

Furthermore, the company has proposed to implement financial covenant holiday until 31 March 2021, where the next testing period will be for the quarter ending 30 June 2021.

BreadTalk is also seeking to insert a call option to better manage the Company’s debt liabilities with a call premium of 0.50%, exercisable during the period commencing on (but excluding) 24 April 2020 and ending on 31 March 2021.

For the consent solicitation, the firm would like to include an early bird consent fee of 0.50% with a deadline of 3 April 2020 at 5.00pm and a normal consent fee of 0.25% with a deadline of 13 April 2020 at 2.30pm to vote in favour of the extraordinary resolution

The noteholders’ meeting in respect of the Series 002 Notes will be held on 15 April, whilst the results of the meeting will be announced thereafter.

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