Mergermarket Intelligence

08 April 2020 Asia-Pacific COVID-19 Intelligence Highlights

acuris.com Acuris Asia-Pacific COVID-19 Intelligence Highlights

Introduction Mergermarket 03 Inframation 08 Asia has been on the frontline of the coronavirus crisis for over three months. As companies, advisors and investors across the AVCJ 13 region react to this unprecedented situation, Acuris’s market-leading products provide news, data and analysis to help you make better business decisions. Mergermarket and AVCJ help corporates, private equity houses and bankers identify M&A Debtwire 16 opportunities while Debtwire provides unrivalled insight into credit situations as they unfold. Investors, legal advisors and PaRR 26 companies rely on Dealreporter and PaRR to track equity markets and make sense of the fast-moving regulatory landscape while Inframation provides financing and trading intelligence and data for the global infrastructure and energy sectors. Dealreporter 32 This report contains a selection of our coverage on how the COVID-19 crisis is impacting different markets in the region produced by our in-country teams of editors and analysts across Asia. We hope you find it useful. Please feel free to contact us to learn more about how we can help you stay better informed during these difficult times – and beyond.

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Mergermarket is an unparalleled M&A news and intelligence tool specifically targeted to generate opportunities for corporate advisory outfits and private equity firms. Mergermarket Intelligence

Introduction

The COVID-19 pandemic has disrupted global M&A and IPOs on a massive scale this year. It has caused a sharp slowdown in APAC deals, with the region seeing a 32.7% YoY decrease in deal value - the lowest quarterly value since 1Q13. Mergermarket has continued to provide the most relevant insights and opportunities to help subscribers navigate through this uncertainty. From exclusive interviews on how companies are changing strategies to timely updates and scoops on sale processes, Mergermarket readers hear it first. We strive to identify future M&A opportunities for dealmakers as struggling companies seek out restructuring or financing measures to weather the storm. Mergermarket also helps corporates and private equity firms identify distressed M&A targets. Below is a selection of articles analysing COVID-19's immediate impact on APAC M&A deal flow and identifying the key issues to track in the months to come.

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14 Feb 2020 China dealmakers brace for slowdown amid COVID-19 outbreak by Ling Yang and George Shen in Shanghai, Jennifer Zhang in Chongqing and Riccardo Ghia in Hong Kong; analytics by Neal Zhang

• Market comeback expected in 2H epidemic in 2003 might hint on M&A outlook taking a toll on China leisure sector including many to shut stores and suspend production for the second half of this year. China travel, entertainment, catering, brick and mortar temporarily as the cash flow crunch has led to Domestic M&A likely to surge due to cash • recorded USD 6.58bn M&A deal during 1H03, retail chains and offline education centers, as seeking financial bailout. Several companies crunch but the deal value soared to USD 20.6bn in well as transportation sector, he added. But may be forced to sell at a lower price to raise • Deal settlement unlikely to be impacted 2H03 when the outbreak calmed, according to meanwhile, online gaming , online education, funds, as banking loans would become difficult, Dealogic data. Acuris and Dealogic are both live-streaming and short video sharing according to an inbound M&A advisor. owned by ION Group. platform, online fitness app, e-commerce apps, The coronavirus repercussions on the The SARS-like coronavirus outbreak will disrupt enterprise collaboration apps are gaining Between November 2002 and July 2003, economy marks the latest in a series of the natural flow of China M&A activity, but the ground, according to the Shanghai based SARS caused 774 deaths reported in 17 setbacks to the economy over the past impact remains limited to timeline slippage investor. countries with the majority of cases in years, forcing the central bank to boost the and investors expect a deal ramp-up in the mainland China and Hong Kong. GGV Capital recently announced that it provision of liquidity in the markets. Beijing second half of this year, according to several funded Shenzhen-headquartered Mogulinker announced to pump CNY 1.2 trn into financial dealmakers polled by this news service. Blessing in disguise Technology Co Ltd, a software-as-a-service markets as it ramped up support for the virus Deal origination and execution are affected in Some PE investors however see this contagion (SaaS) provider, in its Series B round which fight, as reported. However, it implies a steep the first quarter due to nationwide quarantine as a blessing in disguise as the ongoing offers real-time running data that can connect deterioration in debt to equity and debt to measures ordered by the Beijing to fight with economic shockwave is accelerating industry manufacturers, suppliers, equipment and users GDP ratios across the system, according to the the epidemic which lead to 1382 fatalities consolidation and benefit those who have for optimal operations. Shanghai-based investor. so far, they said. Technology is alleviating invested in the industry leading players. In Industrial companies will likely speed up In the meantime, a potential wave of corporate the problem but cannot fully cushion the addition, some cash-rich and star companies, hunting for smart manufacturing bolt-on buys, sale might coincide with disposals made by blow. China’s State Administration for Market used to shutting their doors to financial as the situation fully unveils the importance of companies looking to re-focus on their major Regulation (SAMR) now requires merger filings investors, are reconsidering financing strategy digital solutions for traditional manufacturing businesses, to help alleviate financial stress. to be carried out either online or by post due and will be receptive to investor approaches companies, an investor manager from a state- to the outbreak. to weather the abrupt crisis, according to a Chinese companies, both SOEs and private owned enterprise said. Shanghai-based private equity investor. companies, have enjoyed a huge passion for Deal activities YTD have experienced a free fall However, buyers are unlikely to drastically diversification strategies, snatching assets that compared to the same period last year. From Valuation adjustment is also within expectation, change their investment strategy in response they don’t really need, over the past few years, the beginning of this year until 10 February, with the first quarter financial performance to the ongoing epidemic as the issue remains especially during the outbound M&A craze China including Hong Kong recorded 84 deals likely to hit bottom line, but significantly, temporary, the investor said. before 2018. with total deal value worth USD 8.411bn, down discount appears to be unlikely, the investor 54.1% and 76.6% respectively, compared to the said. Liquidity crunch same period last year, according to data from Continued The contagion changed consumption patterns The domestic M&A deals might surge because Mergermarket. Read the full story online and at the same time created a boost for of financing difficulties confronting China’s However, the deal surge following SARS online application. The outbreak is especially small and mid-sized enterprises, forcing Read more mergermarket.com Mergermarket Asia-Pacific COVID-19 Intelligence Highlights 5

16 Mar 2020 Japan Inc adopts ‘wait-and-see’ stance for M&A amid COVID-19 recession fears by Ryuya Shiga, Nozomi Toyama, Mai Mizuta, and Takuma Sasaki

• Nikkei 225 has plunged 25% since start of There had been a healthy pipeline of deals the number of deals in Japan to decline have dry powder to invest, he said. In fact, it this year since the start of 2020, but many of these temporarily as many Japanese companies should be a great time to acquire companies have now been suspended as decisions at the need to allocate funds, which had been at reasonable valuations and there should be • Acquisition opportunities for strategics and management and board levels have been put set aside for M&A, to respond to the crisis. numerous turnaround targets coming up in the private equity remain on hold, the second banker said. However, government stimulus packages market, he added. offered to companies in the event of a • Current inflated valuation to see The third banker noted there would be fewer A private equity source echoed this view recession should enable them to return to the readjustment RFPs in the coming months. “The key question and said that during such a phase, there is a M&A market relatively soon, he noted. is how long this will last and what the real certain period where the expectation between impact is,” he added. Mark Weeks, partner at Orrick, pointed out sellers and buyers do not match immediately - Japan Inc is largely adopting a “wait-and-see” that lower stock prices and appreciation sellers tend to keep higher expectation based stance with regards to M&A deals against Companies such as Tokyo-based of the Japanese yen could present buying on the previous price range, while buyers the backdrop of a potential global recession telecommunication company KDDI [TYO:9433] opportunities for far-sighted Japanese buyers. are seeing the bottom, he continued. This sparked by the COVID-19 outbreak, according noted it had no plans to cancel or Recent inflated valuations are being adjusted sort of mismatch will be resolved soon after to dealmakers polled by this news service. postpone any investments due to the novel downward due to the coronavirus outbreak. companies enter into bankruptcy, and owners coronavirus as of now. Tokyo-based IT service Some advisors also noted that a few of their Japanese companies keen on acquiring will get to know what the real range is, he provider Fujitsu [TYO:6702] said it could deals had been terminated and/or stalled due cutting-edge technologies, including artificial noted. not immediately comment about COVID-19’s to increasing uncertainty. “For both sellers intelligence and big data, may now see such potential impact on M&A. Prior to the outbreak, Japanese private equity and buyers, it is not the right timing to push targets within their grasp, he continued. activity had been on the rise, helped by banks deals forward as conditions have changed Meanwhile, Unizo Holdings [TYO:3258] Lower share prices could bring an uptick in aggressively extending financial leverage to subsequent to the outbreak,” the first banker announced last week that it was planning to unsolicited takeover offers from strategics with about 10x EBITDA due to the negative interest and an advisor said. sell properties valued at about JPY 130bn strong balance sheets, Weeks said. Targets with rate policy adopted by the Bank of Japan, the (USD 1.2bn) in April 2020 or thereafter. It noted Eiichi Yamazaki, head of global advisory weak balance sheets or a negative outlook due fourth banker said. However, in light of the that due to declining asset values because at Mizuho Securities, said the importance to a recession or downturn in their industries, ongoing situation, financial leverage could of increased uncertainty about the future on of M&A as a business strategy would remain such as travel and leisure, may be especially contract to below 5x or even 3x EBITDA and account of COVID-19 and other factors, it unchanged. However, it could be less of a vulnerable, he noted. Private equity and activist this would affect private equity activity in terms was scaling up asset sales. Separately, news priority now as companies respond to more funds also intensify their investment efforts of investments and exits, the fourth banker reports have also pointed out that Unizo may urgent issues. The current situation prevents under such circumstances, he added. added. be accelerating asset sales aimed at securing dealmakers from conducting site visits and funds to conduct an employee buyout and Private equity buyouts – opportune timing? meetings, and cross-border deals in particular reducing the company’s enterprise value to Continued are being impacted. Processes such as Meanwhile, the first banker noted that private fend off takeover attempts from other bidders. Read the full story online auctions and researching targets are being equity firms are gearing up for potential buying affected, he added. Dai-ichi Life Research Institute’s Executive opportunities. For private equity, a recession Chief Economist Toshihiro Nagahama expects is not an immediate issue as funds already Read more mergermarket.com Mergermarket Asia-Pacific COVID-19 Intelligence Highlights 6

16 Mar 2020 Coronavirus to add impetus to ‘cross-sector’ M&A as corporates target tech to support core business

by Louise Weihart in Sydney

• Driven by need to keep up with digitization No company can escape the move to but care is needed in planning to ensure the startup Digital Asset to date, while insurance technology and M&A will primarily be driven underlying strategic logic of the transaction broker network AUB Group [ASX:AUB] Coronavirus to put spotlight on certain • by the need to keep up with digital innovation, is preserved and maximum value is unlocked, invested AUD 132m for a 40% stake in Sydney- sectors cut costs, and boost revenue and efficiency, Pottinger’s Sheehy added. based online, low-cost and commercial Solutions that solve niche problems will be agreed Rajeev Gupta, partner at Sydney- insurance distribution platform Bizcover this • Ubiquitous across sectors targeted based investment firm Alium Capital. This February. trend has been big in the US in the past four The trend towards technology investment Also in education and services, Sydney-based to five years and Australia is now catching up, will be ubiquitous across all sectors, experts Australian corporates are expected to wealth education and services provider DG he said. agreed, with EY’s Larocca highlighting sectors increasingly make “cross-sector” M&A Institute told this news service in January that are facing disruption like healthcare and moves across the board as they invest in or The coronavirus pandemic is a development it is seeking buys and is particularly keen financial services. Healthcare, in particular, acquire technology companies to support that will add impetus to technology investment, on technology-based services companies could see heightened activity in the wake of their core business activities in 2020, with particularly in the fields of remote working, that can fast track its in-house technology the coronavirus pandemic, sources agreed. the coronavirus pandemic providing added employee engagement, business continuity, development. impetus, according to advisory and industry and digital client services, said John Sheehy, Tele-health, for one, which has suffered from There has also been aggressive activity in sources polled by this news service. CEO of Sydney and New York-based corporate inertia and lack of government support to date, the consumer sector with companies making advisory firm Pottinger. None of this is new, could well get the boost it needs in the current Technology will be one of the top sectors acquisitions to support their online businesses, but the pandemic is going to shine a light on environment, Gupta said. Education certainly for investment and acquisition in the next 12 noted Alium Capital’s Gupta, citing as an the value of good technology in these areas has merits to being delivered online and with months as pressure to embrace digitization to example Wesfarmers’ June 2019 purchase of and will also serve as a reminder of the value the current coronavirus pandemic, online drive growth compels executives to acquire online retailer Catch Group for AUD 230m of human-to-human connection as we enter learning may well flourish, he added. outside of their sectors, said EY Oceania to accelerate its ecommerce and digital a more isolated online world in the coming Transaction Advisory Services Leader David A report from Bombora Investment capability. months, he noted. Larocca. Management on Friday (13 March Technology businesses that are asset-light 2020) highlighted Pacific Knowledge According to EY’s latest bi-yearly Global may benefit once the virus situation stabilizes, Systems [ASX:PKS], whose healthcare Continued Capital Confidence Barometer, featuring Alium Capital’s Gupta added. The key is software is used in pathology Read the full story online interviews with some 1700 global executives to maintain low costs and cash burn in an labs, and education technology and including 170 in Australia, 66% of Australia environment when the economy is generally company Janison [ASX:JAN] as among those and New Zealand interviewees expect cross- Read more weaker, he said. that could benefit from current conditions. sector M&A to be driven by technology and digitization, compared to 75% globally, with Technology M&A can allow corporates to In the financial services space, the Australian key drivers being the race to secure new leapfrog long internal technology development Securities Exchange [ASX], for one, technology and talent (both at 23%). programs and plug critical gaps in IP arsenal, has invested USD 30.9m in blockchain

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17 Mar 2020 Southeast Asia deals on uncertain footing due to COVID-19 fallout but bright spots in health, e-commerce/tech, supply chains emerge

by Likha Cuevas Miel, Lizzie Ko, Krista Montealegre, Warangkana Tempati, Tony Goh, I Made Sentana, and Anh Duy Giap

Dealmaking in Southeast Asia, the first region Certain sectors including data centers, digital been a rise in inquiries in the last two months Philippines to see the most COVID-19 infections after healthcare, online education, e-commerce, from companies looking to make direct The country’s National Capital Region, which the Lunar New Year, has become murkier and other technology providers that provide investments/to acquire companies related contributes about 40% of national GDP, is with fundraising and deal timetables up in delivery of these services are also faring well, to supply chains in Thailand. Companies on a lockdown that started midnight of 15 the air amid volatility in the financial markets, the advisors noted. that have been inquiring about investment March. Several provinces outside Metro according to industry advisors. However, bright opportunities belong to these sectors: Singapore-based online retail cashback Manila implemented their own lockdowns spots in several regions are emerging from the medical equipment, sportswear, furniture, food firm Shopback just raised USD 30m in a to contain the spread of the virus, further commotion and dealmakers are taking note of additives manufacturing, food processing, and funding round led by Temasek, with Rakuten curtailing commerce. The pandemic could cut these. pharmaceutical. [TYO:4755], EV Growth, Cornerstone the country’s growth to 5.7%, much slower Singapore Ventures, EDBI and 33 Capital joining the Meanwhile, hotel and tourism-related than the government target of 6.5% to 7.5%, round. businesses are bearing the brunt of the according to New York-based think tank, In Singapore, the hardest-hit businesses by COVID-19 fallout but this will give rise to buying Global Source. the pandemic are retail, food and beverage Meanwhile, traditional industries such as opportunities as there are more inquiries for (F&B), and hotels as it was among the first manufacturing and construction need to All businesses nationwide are disrupted and boutique hotels that may be up for sale, Ahuja after China to hit the red button in terms of reduce their reliance on labor and adopt a tourism and allied services such as aviation, said. E-commerce retailers and logistics firms limiting human movement to stem the spread smart/automation approach to better manage hotels, malls, restaurants, entertainment, that provide home deliveries are doing well of the virus. the risks of a similar labor shortfall in the future ports, and logistics are now taking a beating during this pandemic as people tend to avoid due to quarantine and immigration control, from this pandemic, First Metro Investment This news service reported, before Lunar commuting as much as they can, he added. the advisors said. There are opportunities for Vice President Cristina Ulang said. Margin New Year, that Eu Yan Sang, a Singapore- investors to provide funding for the upgrade The National Economic and Social compression may also temporarily dent cash headquartered manufacturer and retailer of of these businesses, they noted, adding Development Council (NESDC), the Thai flow predictability and weaken debt service traditional Chinese medicine, may be seeking a that upgrades may be necessary to support government’s economic planning agency, last coverage ratios, she added. sale. However, the process may be put on hold business supply chain diversification, so month projected Thailand’s 2020 GDP growth as the region reels from the economic effects RCBC Capital President, Jose Luis Gomez, said firms do not rely on a few geographies for would slow to between 1.5% and 2.5%, from of the pandemic, as reported by Reuters last the general slowdown in economic activity procurement of key resources. 2.4% last year. Kasikornbank, Thailand’s largest month. could reduce the need for more borrowing commercial bank, even projected growth would Thailand despite rates being generally more favorable to That said, deals in healthcare, education, and be at a paltry 0.5% given that the COVID-19 borrowers. services are still ongoing or are still scheduled This global supply chain disruption is a bright outbreak has affected major contributors to to be launched in 2Q20, according to advisors. spot for Thailand as international companies the economy. Prasert Tantayawit, managing The launches, however, will be slower than have been searching for other locations director at Maybank Kim Eng Securities Continued usual due to travel limitations and remote work outside China as alternative manufacturing (Thailand)’s Investment Banking Department, Read the full story online arrangements, they said. hubs, or for diversification of their supply said it was likely all or almost all IPOs would be chains. According to Country Group Securities delayed. Read more Managing Director Ashwani Ahuja, there has mergermarket.com Inframation Asia-Pacific COVID-19 Intelligence Highlights 8

Inframation is the world’s leading intelligence provider for infrastructure finance professionals, supplying real-time information on the projects, politics and people shaping the infrastructure finance sector. Inframation Intelligence

Introduction

Just when Asia seemed to be limping back to a limited degree of normalcy, COVID-19’s renewed spread around the world has sunk hopes of a quick resurgence of market activity. With face-to-face meetings - probably more crucial in Asia than elsewhere - now taboo, investors and other market participants are beginning to realise an important truth: that the wait-till-it’s-over approach may have run its course. It is time now to devise strategy taking into account the pandemic, rather than waiting for it to end. Central banks in Asia, from China and India to New Zealand and Singapore, have announced extensive easing to offset the impact. The markets have responded in short, optimistic bursts before creaking under the reams of bad news from around the world. Many deals - including by China Three Gorges and a host of airport transactions, especially in Southeast Asia - have been put on ice, with no word yet on when or if they will resume. From a macro perspective, S&P suggests that Asia-Pacific economic growth will more than halve this calendar year to sub-3%, and that China’s will come in at 2.9%. While the negativity has come thick and fast, some investors will now be preparing to look beyond and prepare for the uptick. Below is a selection of insightful content from Inframation, including what has happened and what is likely to come.

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18 Feb 2020 Coronavirus Stalls China Three Gorges Stake Sale by Rob Clowe and Celine Ge

Further information From our sister publication SparkSpread China Three Gorges continues to pursue Get in touch or read more opportunities outside of its home country. It competed unsuccessfully to buy the 396 MW China Three Gorges’ sale of a minority stake in Merkur offshore wind farm in Germany, which Laurence Edwards its global portfolio has been put on hold as the was sold last year to APG and The Renewable country grapples with the coronavirus outbreak, Infrastructure Group. It is also bidding for global Cross navigation content according to sources familiar with the matter. solar developer Fotowatio Renewable Ventures. requires an internet connection. The state-owned company is based in Hubei Last year, the company tried and failed to province, the epicentre of the epidemic that increase its stake in EDP to above 50%, but has accounted for more than 1,800 fatalities it continues to work with the Portuguese so far. Three Gorges started looking for an company in Europe and Brazil. investor last year in an effort to recycle capital It is also working with SinoHydro and Spain’s and diversify its ownership. CITIC Securities ACS Group on the slow-moving USD 14bn, is financial advisor for the sale. State Grid 4,800 MW Inga III hydropower project in the Corporation of China is engaged in a similar Congo. sale process. Officials at China Three Gorges did not In addition to its power assets, the company respond to requests for comment. has interests in infrastructure assets including Beijing Enterprises Water and Changjiang Ecological Environment Group that boast a raft of water PPP projects along the Yangtze River. The company was formed to own and manage China’s largest dam on the Yangtze. It controls more than two dozen subsidiaries, which in turn hold South Asian, Latin American and European assets. Some of the company’s interests - such as its 23% stake in Energias de Portugal (EDP) - are minority positions. The company’s corporate structure will likely need to be tidied up before any transaction is concluded, sources previously told SparkSpread. inframationgroup.com Inframation Asia-Pacific COVID-19 Intelligence Highlights 10

11 Mar 2020 Brookfield suspends Dalrymple coal terminal sale by Shaun Drummond

Further information Brookfield has suspended the sale of its AUD Brookfield has owned Dalrymple Bay Get in touch or read more 2.4bn (USD 1.5bn) Dalrymple Bay Coal Terminal since 2010. It is jointly held by Brookfield due to travel bans and market ructions caused Infrastructure Fund 1 (BIF 1), the publicly listed by Covid-19, a source close said. Brookfield Infrastructure Partners and other Laurence Edwards co-investors, according to Inframation Deals. Travel restrictions due to the Covid-19 pandemic have made it difficult to hold Brookfield holds a 50-year lease with a 49- Cross navigation content meetings and site tours with potential buyers, year option to operate, maintain and develop requires an internet connection. the source said. the terminal. Brookfield is running a dual-track trade sale and IPO process to sell the coal terminal, located near Mackay in Queensland, 1,000km north of Brisbane. Equity market volatility, caused by escalating fears over the spread of the virus, has scuppered any immediate plans for the IPO, the source added. Late last month, BAML and HSBC fielded indicative bids for the trade sale, while Citi and Credit Suisse, who are advising on the IPO, kicked off the roadshow at the beginning of March in Melbourne and Sydney. Additional meetings were planned with Asian, European and US investors. Brookfield has set no timeframe to resume the sale. The infrastructure manager will monitor the impact of the virus over the next few months before making its decision. A Brookfield spokesperson declined to comment for this report.

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27 Mar 2020 In-Depth: Covid-19 Will Trigger A New Infra Boom In China by Celine Ge and Chenyu Liang

China’s economy still has a long road ahead “What’s special this year is the active The ‘infrastructure investment boom in and hyper-scale data centres including those to full recovery following an unprecedented involvement of the private sector, because the making’ involves dozens of provincial powered by renewable resources, according to two-month lockdown and a 10-week halt of many parts of new infrastructure can be governments and a raft of infrastructure Ping An. almost all business and social activities for the well commercialised,” Su Yue, an economist project plans that could total investment While large cities such as Beijing, Shanghai, 1.4 billion population nation. with the Economist Intelligence Unit told of more than CNY 25trn (USD 3.6trn) over Guangzhou and Shenzhen might have limited Inframation. the coming years. Projects singled out by Last week the country’s National Bureau of room for data centre market growth due to the authorities include 5G infrastructure Statistics recorded the slowest growth in His remarks were echoed by Morgan Stanley strengthening regulations, more projects could (particularly telecom towers), ultra-high- industrial output in almost three decades. Chief China Economist Robin Xinjin, who emerge in their neighbouring cities, as well as voltage transmission lines, smart city projects, Goldman Sachs had already predicted China’s predicted in a press briefing last week that northwest and southwest China, where there high-speed inter-city railways and data first-quarter GDP growth would experience a more than half of the “new infrastructure” are lower electricity tariffs and sufficient land centres. Social infrastructure, particularly 9% contraction, from a previous forecast of investment being promoted by the central supply, the note said. healthcare, was highlighted as another focused 2.5% growth. government could come from the private sector for new projects. China’s data centre market is set to reach sector. To revive an economy that has been stricken 3.267 million racks in total capacity by the “We see a phenomenal increase in the central by the COVID-19 pandemic, the Chinese Infrastructure owners, including data centres in end of this year, up from 2.03 million in 2018, government’s emphasis on digital infrastructure government has resorted to an old-fashioned major Chinese cities, could potentially benefit according to China Academy of ICT. since the outbreak of Covid-19,” Ping An approach of boosting infrastructure from targeted preferential policies such as tax Securities analysts led by Yan Lei wrote in a “Data centres are categorised by the central investment. But this time central government waivers and electricity cuts, he said. note to investors. One of the main reasons government as a type of new strategic has made it clear that the private sector will China’s latest push for the development of behind the move, the note said, is that the infrastructure in China,” William Huang, likely play a much greater role. data centres, 5G telecom and other so-called “new infrastructure” will likely be backed chairman with the country’s largest private It is against a backdrop of debt-ridden local “new infrastructure” assets was first officially mainly by private investors and therefore ease data centre developer by assets GDS says. government investment vehicles faced with revealed by the transcript of a Communist financial pressures on the government. His company was invited by the government to tight fiscal budgets and an ambitious target to Party Politburo meeting chaired by President Xi Data centres discuss potential relaxation of regulations for roll out new big-ticket projects. Jinping earlier this month. The ‘new investment’ data centre development in first-tier Chinese theme was later reiterated in multiple Demand for data centres exploded after tens New infra, old thinking cities such as Beijing and Shanghai as part of speeches and reports released by various of millions of Chinese residents were asked to the plan to cultivate the industry. According to sources spoken to for this article, government agencies including the country’s study and work at home as a result of the virus. digital and social infrastructure assets recently economic planner National Development and “In the longer term, this trend of digitalisation is promoted by the government are naturally Reform Commission. The instructions, given Continued irreversible,” Yan Lei wrote. more suitable for private-sector investment by the Politburo – China’s highest decision- Read the full story online and operations. making body – include a special focus on Driven by a favourable policy environment, motivating private sector investors. there will be a rising number of large-scale Read more

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27 Mar 2020 News Analysis: India’s Road Builders Face Crucial Quarter As Hopes Turn Sour by Rouhan Sharma

India’s road developers, hit by a liquidity "Revenue will be affected due to the essential in the current context. About again,” said Nitin Patel, executive director at crunch and looking forward to a pick-up in precautionary measures that are necessary 2,900km of roads had been awarded by NHAI Sadbhav, but added that the industry had construction after an extended monsoon, are during this pandemic.” this fiscal year that began April 2019. better brace itself for a challenging period. now facing a potentially crippling blow brought Mumbai-based Welspun Enterprises earlier “Successful bidders for these awarded All the officials Inframation spoke to said about by the coronavirus shock. this week said it is halting work across all its projects are going to be delayed as an entire they are evaluating their legal options and Apart from deals slowing and corporate offices and project sites till further notice. chain of events from financial closure to may invoke a force majeure clause in their face-to-face meetings now taboo, the other The duration of this shutdown will depend notifying the start dates for construction will all contracts. Lawyers said there have already concern is the inability of construction workers upon further direction from the government, get extended,” he said. Banks are expected to been instances where the coronavirus has had to reach sites as India implements the world’s Welspun said in an exchange filing. slow disbursals due to a scarcity of manpower, an impact on deal negotiations and contract biggest COVID-19 related population lockdown, impacting financial closures, working capital drafting. Yesterday, infrastructure developer PNC says KV Rao, Hyderabad-based general requirements and payments to suppliers. Infratech said it is temporarily suspending “We recently worked on a transaction where manager of finance at KNR Constructions. construction activity and toll collection. Bank credit to industry declined to 2.4% the coronavirus was included as a disclosure The January-March dry season - usually The company is in the process of notifying in November 2019 from 4% a year earlier, to the material adverse change,” said Mohit critical as road developers race to catch up authorities about its decision and will invoke according to data from India’s central bank. Gogia, partner at S&R Associates. “That with construction during the dry season - was force majeure, it said in an exchange filing. It While some industries recorded a higher credit transaction had a linkage to the travel industry, more important this year as 2019’s monsoon added that it is yet to quantify the impact of growth, the infrastructure sector saw a decline, and the disclosure was accepted given the rains lasted well into November. This is also the the shutdown. the central bank said. current situation.” time when the National Highways Authority of Construction impact About 25% of the projects awarded under Dibyanshu Sinha, a partner at law firm Khaitan India speeds up the awards process to fulfil the hybrid annuity model in 2018 are yet to & Co., said that companies have “have already its annual target. India is now in the third day India’s main road building agency, the NHAI, start construction, according to Mumbai- decided to invoke force majeure but it will have of a 21-day countrywide lockdown to battle expects that construction in March will fall to based brokerage Spark Capital. Over a third to be linked to how it affects the performance COVID-19. less than half its target. that were awarded in 2019 are still awaiting a of contractual obligations in terms of inability The government has taken several other steps, “We were expecting about 500km of roads formal concession agreement. Much of this is to perform and will also depend on the terms including ordering the closure of all toll booths to be constructed in March but less than owing to challenges in securing financing, the of each contract.” and clarifying on 19 February that supply 200km will be constructed because of the brokerage said in a recent report in February. chain disruptions due to the pandemic can be lockdown measures,” a senior official at NHAI Only option considered force majeure. told Inframation. Continued Nashik-headquartered road builder Sadbhav Read the full story online “We had been operating at about 35% Companies have either scaled down or Engineering expects it will take up to a month capacity but we have taken the decision to shut operations after several states sealed for normalcy to return even after the lockdown. completely halt operations across all locations their borders, allowing only essential items to Read more and we have also informed the stock pass, the official said. The transportation of “The only option is to try and make up for lost exchange about it,” Rao told Inframation. bitumen and cement, which are required for revenue when we are back on the ground construction of roads,are not considered inframationgroup.com AVCJ Asia-Pacific COVID-19 Intelligence Highlights 13

AVCJ is the leading source of information on private equity and venture capital activities in Asia.

AVCJ Intelligence

Introduction Over the past couple of months, COVID-19 has created untold disruption, coursing through Asia and into global markets. Private investors across the region are helping portfolio companies in operational and financial distress. We don’t know when the crisis will abate. Meanwhile, new deals are sparse, exits are stuck in a holding pattern, and fundraising is a challenge for all but the lucky few. Chaos inevitably throw ups opportunities, but investors need to get the timing right. AVCJ will continue to provide coverage of how Asia’s private equity and venture capital industry is responding to COVID-19. Comparisons to the SARS outbreak in 2003 and the global financial crisis in 2008 are drawn with a degree of caution, recognizing that the context and contributing factors are different. However, there is one irrefutable takeaway: those who act decisively are more likely to emerge unscathed.

avcj.com AVCJ Asia-Pacific COVID-19 Intelligence Highlights 14

11 Mar 2020 Coronavirus and fundraising: Caught in a bind by Tim Burroughs

power of this highly virulent virus, a slowdown The coronavirus outbreak has implications Asia PE fundraising, excluding renminbi vehicles for PE fundraising well beyond China. Many in fundraising seems a rather innocuous Asia-based managers are either unable to byproduct, but the seizing up of private capital go and see LPs or LPs are not permitted to flows reflects broader challenges facing visit them stakeholders in all economies as they try to 10,000 keep the money moving. 50 “Every single AGM I had booked overseas in March and April has been canceled in Industry events are useful bellwethers the last week – full stop, canceled. But the of sentiment. Within Asia, they are often 8,000 bigger focus is looking through the underlying accompanied by annual general meetings 40 investees and figuring out what if any impact (AGMs), fundraising roadshows and general No. of funds there might be under various scenarios, and catchups as local GPs take advantage of the 6,000 obviously there is a wide band of scenarios fact that institutional investors are in town. depending on where you are and what kind And four weeks ago, China was uppermost 30 US$ million US$ of business you have. We are in constant in people’s minds. Could a mainland-based 4,000 dialogue, trying to figure it out in real-time, just manager get an audience with an LP, even if like everyone else. There is a lot of work going he hadn’t been home in a fortnight? Would on behind the scenes. We prepare for worst- anyone be brave enough to attend due 20 2,000 case scenarios and hope for the best.” diligence meetings in China, even for hard-to- access funds? Will MacAulay, an investment manager in HESTA’s private capital team, captured the As corporate protocols kicked in regarding 0 2019-01 2019-022019-032019-042019-052019-062019-072019-082019-09 2019-10 2019-11 2019-12 2020-012020-02 mood among LPs at the recent AVCJ Australia who you could meet and where you could & New Zealand Forum. His remarks also meet them, the answer to these two questions underscore how what was initially viewed as soon became self-evident. One placement a China problem has escalated within the agent disputed the notion that China space of a few weeks into a global crisis, fundraising had stopped, preferring to say it US$ million No. of partial or final closes heightening the sense of uncertainty and fears had slowed down, but added that what was of contagion. already likely to be a challenging year would be truly brutal. As of March 9, there were more than 109,000 Continued cases of coronavirus disease – COVID-19 – “We have LPs that refused to take any Read the full story online across 104 territories, with 3,809 lives lost, meetings in January and February,” the agent according to the World Health Organization. told AVCJ at the time. “We heard from one LP Set against the disruptive and destructive that they aren’t going to make any decision..." Read more avcj.com AVCJ Asia-Pacific COVID-19 Intelligence Highlights 15

25 Mar 2020 Coronavirus & leverage: Room to maneuver? by Tim Burroughs

Economic disruption caused by the buyers – and their financiers – might be waiting “The market as a whole is taking a step sponsors for leveraged buyouts in Asia coronavirus outbreak is likely to leave for the confusion to clear. back – it’s been fascinating because we’re in Pacific since 2015 come from the traditional many private equity portfolio companies several live situations,” says Peter Graf, head bank market, according to Debtwire. Regular Questions are also being asked of another in breach of their leverage covenants. of leveraged finance in Credit Suisse’s Asia principal payments and multiple covenants business, Navitas, which puts students into Borrowers and lenders are looking for a fix Pacific financing group. “If you look back at come as standard. academic programs as a stepping stone to the global financial crisis, it played out over Of the more than 400,000 foreign students university enrolment. BGH Capital acquired Given the scale of the economic shock, 6-9 months and then it took down the global enrolled in higher education courses in Navitas for A$2.1 billion last year, supported covenant breaches are inevitable, it’s just economy after 12-18 months. Today, the speed Australia, China accounts for above one-third. by A$1.1 billion in debt. Is this structure robust a matter of when. Airlines, tourism, and of the sell-off has been so much faster and we It remains to be seen how quickly they return enough to bear a drop-off in revenue without hospitality have felt the initial pinch, but need more time to assess the full impact.” to class. sliding into default? The message from a the impact of cutting off out-of-home source close to the deal is unequivocal: “There Double wave consumption and curtailing supply chain International education is one of countless is no – as in zero – chance Navitas breaches activity will be widespread. Lenders are likely areas experiencing uncertainty and chaos as From a leveraged finance perspective, this its only covenant for many, many years.” to give borrowers some leeway – based a result of the coronavirus outbreak. Australia, impact will come in two waves: the first on a recognition that the crisis is macro in like many other nations, closed its borders to Two weeks ago, leveraged finance immediate as companies secure short-term nature and pushing countless companies into all apart from citizens and permanent residents professionals were still working on new deals liquidity; the second over the next three bankruptcy would do more harm than good last week. But the ban on international arrivals for PE firms enjoying a prolonged period of to nine months as the covenants attached – but there will still be winners and losers, who have traveled from or through mainland ample liquidity. Now, sponsors and lenders to term loans that underpin LBOs undergo rebounds and restructurings. China was introduced in February. Depending alike are scouring the operational metrics quarterly financial performance tests. The on how long the lockdown continues, and financial structures of existing portfolio covenants in question are designed to educational institutions could be deprived of a companies for signs of weakness. capture whether a business can make interest Continued key source of income. payments on its debt and whether it can The speed of the decline has caught everyone Read the full story online sustain operations under its current debt load Having contributed A$21 billion ($12.5 billion) off guard. In the past fortnight, the Credit and budgetary commitments. to Australia’s GDP in 2018, and with nearly 25% Suisse leveraged loan index marked its Read more of students from overseas, international higher three worst days on record in just a four-day Confidence in the Navitas structure likely education is big business. Disruption to this window due to a large-scale sell-off across all stems from a high bar in terms of what the lucrative dynamic is already affecting private industries and ratings. Yields in the high-yield company must do to breach its covenant or equity investors interested in the space. markets increased by 676 basis points over wide scope in what it can do to make amends. Further information Laureate Education has yet to announce the course of four weeks, a steeper sell-off in It is one of few unitranche structures in the Get in touch or read more who will buy its Australian and New Zealand a shorter period than the euro zone and Brexit market that offer such flexibility. Covenant-lite operation, despite PE and strategic bidders crises of 2011 and 2016. Even in the global deals that aren’t subject to these quarterly Gaurav Nayak aggressively chasing the asset. With debt financial crisis, it took 78 weeks for yields to maintenance tests are equally rare. Four-fifths and equity markets suffering convulsions, the peak. of the more than $50 billion raised by financial avcj.com Debtwire Asia-Pacific COVID-19 Intelligence Highlights 16

Debtwire keeps you updated on stressed/distressed and highly-levered credits, acquisition targets and financing, private financing, investments and exits, through a mix of deal stories, features, investigative reports, and credit analysis reports. Debtwire Intelligence

Introduction

With high yield bond yields jumping to 15%-30% levels, the Asian primary bond market has been at a standstill since the second week of March when the global markets started selling off in response to the coronavirus. As such, the amount of new high yield bonds issued in March nosedived 79.3% year-on-year to USD 2.35bn with no issues seen for the last two weeks of the month.

A surge of buying from Chinese investors towards the end of March provided relief for a much-beleaguered market, though there have been no signs yet that highly levered credits will be able to source funding via offshore bond issuance anytime soon.

As of 3 April, the JPMorgan Asia Credit Index for Corporate Non-investment index had fallen 11.15% since the start of the year, nearly wiping out the 12.72% gains made during calendar 2019. The average yield to maturity stood at 9.99% as of 3 April, with spread over treasuries at 948bps.

While the impact of the coronavirus can certainly be seen in the way prices for high yield has traded down to stressed/distressed levels, there have been few restructuring mandates to emerge from the crisis. One reason for this is that governments around the region are putting banks under pressure to exercise forbearance with some temporarily amending insolvency laws as well. Another reason for the relatively low numbers in new restructuring mandates is that companies that were already seeking large negative cash flows have been able to draw down fully on the unused portions of their loan facilities and standby letters of credit.

“The big wave of defaults will happen, but it’s not happening now,” said a restructuring lawyer. “A lot of these companies will run out of cash, so it’s just a matter of time.”

That’s not to say lawyers and financial advisors aren’t busy: a growing number of companies are seeking covenant waivers as borrowers seek to draw credit lines there are in some cases getting resistance from their lenders which could lead to a flow of litigation work. The same goes for disputes where borrowers are seeking injunctive relief against banks seeking to enforce margin calls.

One reason for this is that governments around the region are putting banks under pressure to exercise forbearance with some temporarily amending insolvency laws as well. Another reason for the relatively low numbers in new restructuring mandates is that companies that were already seeking large negative cash flows have been able to draw down fully on the unused portions of their loan facilities and standby letters of credit.

“The big wave of defaults will happen, but it’s not happening now,” said a restructuring lawyer. “A lot of these companies will run out of cash, so it’s just a matter of time.”

debtwire.com Debtwire Asia-Pacific COVID-19 Intelligence Highlights 17

06 Feb 2020 Chinese HY developers downplay outbreak as manageable; bonds recover by Terence Wong

Chinese high-yield bond-issuer developers centers to comply with government measures New Years and Chinese New Year. Despite Guangdong being the second most are generally playing down the balance-sheet limiting face-to-face interactions, said the affected province by the outbreak, Logan, Central China Real Estate yesterday became effects of the novel coronavirus as manageable, buysiders. which had over 80% of its land bank in the the first developer to print following the touting their fund raising shortly before the wealthy southern province’s core Greater HSBC, in a 31 January research report, announced outbreak, using a drive-by deal to outbreak became public as sufficient to shore Bay Area as of end-2019, still expects “stable named KWG Group, Yanlord Land Group avoid meeting investors face to face. up their liquidity, said more than 10 buysiders. growth” in its sales this year, the two buysiders and Longfor Group as having the highest The Henan-based homebuilder, which priced its said, citing the update sent out by the Nonetheless, reflecting the severity of the land-bank concentration areas covered by new 364-day, 6.875% bonds to yield 7%, told company. situation, updates circulated to credit investor government restrictions on sales offices. The investors during the marking conference call by at least 16 of the developers this week also bank also named Shenzhen Investment, Logan Of the 16 developers, 14 specified in their yesterday morning that it expects its contracted forecast a large hit to 1Q20 presales, said the and Country Garden have having the largest respective updates that they will adopt a very sales to drop 10%-15% year-on-year because buysiders. land-bank exposure to five most-affected conservative approach on cash management, of the epidemic, said two of the buysiders. provinces. said the buysiders. In line with that strategy, Supported by the generally constructive tone Other developers so far have not quantified in Greenland and Zhenro maintained that they of the updates, high-yield USD bonds from To cope, developers including Greenland their respective updates the expected impact will not participate in land auctions until the the Chinese property sector have generally Holdings, Logan Property, China Aoyuan from the outbreak on their contracted sales, epidemic eases, whereas Logan, Jingrui, outperformed the overall high yield market Group, Jingrui Holdings, Fantasia Holdings said the buysiders. Ronshine and Kaisa said they will be very since Monday, paring last week’s material mark- Group, Modern Land (China), Ronshine cautious in terms of land acquisitions. In the downs, said a dealer. China and Kaisa said that they will move to HSBC, in a 31 January research report, set its meantime, to help with liquidity, Greenland, online sales platforms. base case scenario for 2020 PRC contracted Double-B bonds from the sector were up Logan and Yango Group said they will focus on sales growth to be 2%, down from 17% the 50bps-75bps so far this week, while higher- Some of the developers, including Jingrui, Kaisa cash collection for earlier contracts. bank previous forecasted. The revised base beta single-B paper gained 2-3 points while and Zhenro Properties Group said in their case was based on the bank’s assumptions that Also tempering the effect of the outbreak on the rest of the market was approximately 25bps respective updates that they concluded from contracted sales decline in February would be most high yield bond issuing developers is firmer, according to the dealer. Kaisa Group’s stress tests and sensitivity analysis that they will 50% YoY and that the YoY decline would then that Hubei is not an important market for them USD 300m, 11.95% due-2023s and USD 500m, be able to maintain healthy cash balances even progressively narrow by 10 percentage points and Q1—punctuated by Chinese New Year—is 10.5% due-2025s gained 2.875 points so far if they had no pre-sales for three months, said before normalizing in July as the outbreak is usually a low sales season for the sector, this week, while China Evergrande Group’s the buysiders. contained. Moody’s noted in a report on Tuesday (4 USD 4.68bn, 8.75% due-2025s gained 2.5 China’s delay in disclosing the outbreak in February). points, the dealer said. “There must be impact on the near-term sales,” Wuhan until 20 January created a window for Shanghai-headquartered CIFI Holdings noted “However, if disruption continues for the next Shut down speculative-grade Chinese developers to sell in its update, said the buysiders. “The impact three-to-six months, rated developers with USD 16.7bn bonds via 33 transactions in the The developers, in their updates the week, on the medium and long term will depend on weak liquidity and high refinancing needs, three weeks from New Year, according to data maintained that the main hit to their contracted how the epidemic plays out and adjustments in mostly rated at single-B category, would be compiled by Debtwire. In 2019, they sold USD sales was caused by their need to shut sales government policy.” more vulnerable,” the rating agency added. 11bn across 26 deals in the four weeks between debtwire.com Debtwire Asia-Pacific COVID-19 Intelligence Highlights 18

25 Feb 2020 GCLNE hopes to get loan-maturity extensions using China’s support measures to lessen virus impact

GCL New Energy (GCLNE) hopes to obtain 154m) on 22 January 2020. The sales will be in Subsidies average subsidy collection rates,” the rating maturity extensions/rollover on an unspecified tranches, said the company source. agency noted. Huaneng stated during its November 2019 amount of loans before the next batch of asset An around CNY 4bn bridge loan provided by bond roadshow that it plans to incorporate a GCLNE’s USD 500m 7.1% due-January 2021s sales to China Huaneng Group, making use Huaneng could also help GCLNE meet part discount in the GCLNE solar-farm purchase were indicated at 65/68 today, according to a of the government’s support measures for of its near-term maturities, according to the price to account for uncertainties over second holder. companies during the virus outbreak, said a company source. collecting GCLNE’s receivables from the company source and a market source. government on renewables subsidies, as Although the company has currently used up China’s central and local governments are reported. the entire bridge for debt repayments, under encouraging banks to provide liquidity support the loan terms, GCLNE could first pay down However, GCLNE management stated in to small and medium-sized enterprises and part of the loan with the proceeds of its CNY conversations with credit investors that they privately owned companies, including by 1.08bn solar-farm sale to Huaneng and then hope to sell the solar farms at least at the granting maturity extensions, interest-rate cuts redraw an equal amount, said the company book value - which is reflected in the valuation and new credit lines. source. of its assets sold so far. The Hong Kong-listed solar-farm developer The one-year loan, provided by a trust unit GCLNE reported CNY 8.8bn receivables in and operator expects the next batch of of Huaneng, bears an annual interest rate of government subsidies at end-June 2019, of solar-farm sales to SOE power generator 10%, said the company source and a GCLNE which only CNY 3.6bn was included in the Huaneng to be reached after the government bondholder. current government-subsidy catalogues, implements its new policy on renewable- according to its 1H19 results. In terms of energy subsidies announced in early February, Only around CNY 500m of the bridge was capacity, only 33% of GCLNE’s capacity said the company source. used to repay a shareholder loan from was included in the government subsidy GCLNE’s 62.3%-owner GCL Poly Energy, said The policy implementation -- now expected catalogues as at end-June 2019. the holder. GCLNE had an outstanding USD only in April-May because Beijing postponed 70m 8% loan due in November 2019 owed to Fitch noted in a 11 February release that the its annual national meetings due to COVID-19 GCL Poly, according to an 18 February 2019 most significant part of the newly announced -- will help the companies reach agreements GCL Poly announcement. renewable-subsidy policies is “the expansion on the farms’ valuation, which is the main drag of subsidy coverage from projects constructed on the deal, said the company source. GCLNE and GCL Poly Energy jointly before March 2016 and included in the announced on 18 November that the Huaneng, during its November 2019 bond renewable subsidy catalogue to all operational parent’s originally planned sale of a 51% roadshow, stated it had nearly completed and qualified ones.” stake in GCLNE to Huaneng was scrapped acquiring 2GW of solar farms from GCLNE. and that GCLNE and the SOE entered into “The new policy requires subsidies to be However, GCLNE only announced a 294MW a cooperation framework agreement for a distributed to all eligible projects on a pro-rata capacity sale to Huaneng for CNY 1.08bn (USD potential solar-farm transaction basis, which will benefit those with below- debtwire.com Debtwire Asia-Pacific COVID-19 Intelligence Highlights 19

03 Mar 2020 Debtwire Par – APAC Chart of the Week: Asian HY bond issuance volumes fall 65.3% MoM to USD 7.64bn in February

by Jason Huang-Jones

Further information Asian high-yield USD bond issuance volumes HY Bond Issuance Get in touch or read more fell 65.3% month-over-month in February amid the continuing covid-19 concerns. Jessie Ma Issuers printed USD 7.64bn across 30 deals in February, compared with a massive USD 25 60 22bn from 53 deals in January. The February volumes were 30.8% lower than the USD 11.04bn via 30 deals recorded in February last year. 20 50

Chinese real-estate developers accounted for Number of deals 74.9% of February volumes, while non-Chinese issuers contributed 16.4% and Chinese non- 15 40 real estate corporates the remaining 8.7%. High-yield Chinese developers also accounted for a large chunk of January volumes with the 10 government’s delay in disclosing the covid-19 bn) (USD Volume 30 outbreak in Wuhan until 20 January creating a window for them to sell USD 16.7bn bonds via 33 transactions in the three weeks from New 5 Year. 20 In February, issuances outside of China were primarily from Indian non-bank financial companies: Muthoot Finance issued USD 0 10 550m due-2023 notes and India Infoline

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Jan-17 Apr-17 Jan-18 Apr-18 Jun-17 Oct-17 Jun-18 Oct-18 Jan-19 Apr-19 Mar-17 Feb-17 Oct-19 Feb-18 Mar-18 Jun-19 Nov-17 Mar-19 Sep-17 Feb-19 Aug-17 Dec-17 Nov-18 Aug-18 Sep-18 Dec-18 Nov-19 May-17 Aug-19 Sep-19 Dec-19 May-18

May-19 Finance printed USD 400m due-2023s. Jan-20

Feb-20 HY bond issuances with less-than-a-year tenor by Chinese companies have surged in 1Q20-to-date amid the covid-19 outbreak. In February, USD 1.99bn bonds with tenors of Syndicated Private placement 364-days or less were printed across seven deals. Short-term notes Number of deals

debtwire.com Debtwire Asia-Pacific COVID-19 Intelligence Highlights 20

06 Mar 2020 GATE parent UTAC expects to close sale to PE firm in end-July unaffected by COVID-19 by Terence Wong

Further information UTAC Holdings, the parent of Global A&T UTAC’s minority shareholders have opted to originally USD 625m 10% first-lien due-2019 Get in touch or read more Electronics (GATE), doesn’t expect the participate in the sale, said the buysiders. notes. Under the plan, holders of its USD 543m COVID-19 outbreak to affect its proposed sale due-2015 second-lien loan, which included While the extension of Chinese New Year to a global private-equity firm, and anticipates GATE’s sponsor Affinity Equity Partners, were Jessie Ma holidays following the virus outbreak had an the deal to close before end-July, said two allowed to convert their junior claims into USD impact on the workforce at one of GATE’s buysiders, citing management on a post- 502.257m due-2019s, as reported. The move production facilities in China, management Cross navigation content results call this morning. materially diluted the underlying security pool. expects the situation to improve in March and requires an internet connection. During the 30-minute call, the company April, said the buysiders. The outbreak has During the Chapter 11 process, Kirkland & Ellis brushed off investor concerns that any had no major impact on its other facilities in was legal counsel to GATE. Moelis was its interruption to the Singapore-based Singapore, Malaysia and Taiwan. financial advisor and Alvarez & Marsal was its outsourced semiconductor assembly and test- restructuring advisor. UTAC this morning reported a 3.4% QoQ drop services (OSAT) company GATE’s supply chain in 4Q19 adjusted EBITDA to USD 36.1m, on a Milbank Tweed Hadley & McCloy was counsel might cause the transaction to fall apart, said 2% QoQ fall in revenue to USD 179.6m. During to the first litigating ad hoc group of initial the buysiders. the quarter, the company experienced lower noteholders and PJT Partners was financial “Unless we see a significant change to sales to its Japanese customers and to the advisor to the group. Dechert was counsel the supply chain and therefore our sales, mobile end-market, it stated. to the 2017 litigating ad hoc group of initial [covid-19] should not have an impact in terms noteholders. Ropes & Gray was counsel for the As of end-December, the company had USD of the transaction,” UTAC CFO Ken Rizvi said ad hoc group of additional noteholders, while 191.8m cash and equivalents, against the during the call, according to the buysiders. Houlihan Lokey was their financial advisor. outstanding due-2022 notes, its only debt. Affinity Equity Partners- and TPG Capital- GATE in early 2018 received a US bankruptcy controlled UTAC announced on 23 court approval for its prepacked Chapter 11 January that it signed an agreement with plan through which it sought to restructure its an undisclosed global private-equity firm, original USD 1.13bn 10% senior secured notes. whereby the firm will become its majority The confirmed plan distributes the USD 665m shareholder. The company’s USD 665m 8.5% new secured notes and a 31% share of the due-2023 senior secured notes are expected company’s reorganized equity to its prepetition to be redeemed once the transaction closes, first-lien noteholders. according to the announcement. The plan was filed after years of legal battles The notes were indicated at 97/99 today, said stemming from the company’s controversial a dealer. debt-conversion decision back in October On the call, CFO Rizvi said the vast majority of 2013 - eight months after it first printed the debtwire.com Debtwire Asia-Pacific COVID-19 Intelligence Highlights 21

13 Mar 2020 Wash Your Hands After Reading: The Coronavirus and its Potential Impact on High Yield Bond and Leveraged Loan Covenants –CNI and EBITDA Adjustments by Bart Capeci

Debtwire APAC is republishing this report from prospect of adjusting consolidated net income in revenue because their supply chain has CNI and EBITDA Adjustments sister product Xtract Research on the scope (CNI) and EBITDA for losses relating to the been disrupted due to supplier shutdowns Before we consider what adjustments might for interpreting bond and loan documentation coronavirus pandemic in order to reduce the and transport interruptions related to the virus, be permissible, let’s first start by reviewing to allow add-backs to reflect losses relating impact on their high yield bond and leveraged or they may experience increased costs as consolidated net income, EBITDA and their role to COVID-19. While the report specifically loan covenants. We aren’t talking here about a result of having to change suppliers. Some in bond and loan covenants. Consolidated net cites examples from Europe and North new transactions that specifically mention costs may increase as a result of the virus income is, quite literally, the “bottom line” – the America, the principles largely also apply to coronavirus (among other things because we (such as increased hygiene and cleaning net result of a company’s financial performance APAC corporate USD high yield bonds, even haven’t seen any yet),2 but rather about the costs, and increased overtime to cover for over a period – revenues less costs and though they tend to have fewer aggressive scope for interpreting existing bond and loan employees who are ill or quarantined) and expenses, together with other gains and losses, consolidated net income and EBITDA add- documentation to permit a company to adjust some costs won’t increase but may not be able on an after-tax basis. Or at least that’s what backs. for (sceptics might say ignore) the adverse to be reduced in line with decreases in sales. it is for accounting purposes. In bond and impact of the pandemic on their business All of this is relatively intuitive, but we mention loan documentation, CNI is then subject to for purposes of the leverage and interest it because it is important to remember that a number of adjustments, most of which (in By and large, the finance directors of highly coverage ratios, among other provisions. In the impact of the pandemic on businesses theory at least) are to ensure comparability leveraged companies are not a cheery lot, and this regard, we’ve heard arguments for some will vary from company to company, and while across accounting periods. These adjustments the early indications of the potential financial adjustments that do seem reasonable, but a lot of businesses will likely see an impact generally fall into two categories: non-cash implications of the coronavirus pandemic we’ve also heard arguments for others that we on their bottom line, the impact won’t always items (such as the cumulative effect of a haven’t done much to put smiles on their think are wrong. We’ll try here to distinguish make its way there in the same way. The change in accounting principles and unrealized faces. Indeed, in its preliminary results for between the two. First Principles These second, but related, point we need to make is gain or loss due to currency fluctuations) 2019, Cineworld stated that under a specific being (we suspect) relatively early days in the that it is difficult to speak generally about the and one-off or non-recurring items (such as downside scenario it performed, the equivalent global corona pandemic, the full impact of pandemic’s impact across the bond and loan gain or loss from discontinued operations of between two and three months’ total the virus on businesses has yet to make itself market, because the correct interpretation and deferred financing costs written off in revenue could be lost, and in that scenario shown, but we can make a few relatively safe of whether an adjustment to CNI or EBITDA connection with the forgiveness of debt). “there is a risk of breaching the Group’s assumptions as to what some of these may is permitted will depend very much on the financial covenants, unless a waiver agreement be. Some businesses (airlines, cruise ships, precise language used, with small differences is reached with the required majority of cinemas, health clubs, etc.) will see a loss in in how a definition is drafted having potentially Continued lenders” 1 . We suspect that other companies revenues, as potential customers begin to significant differences in the outcome. While Read the full story online are coming to similar conclusions. However, avoid their services due to the perceived risk we’ll look at a number of typical provisions while we wouldn’t necessarily rank finance of catching the virus. Other businesses (car below, you really do need to look at each Read more directors highly among the world’s optimists, manufacturers, for example) may see a loss transaction individually. they do tend to be pretty good at trying to make the best of bad situations. We weren’t 1 It should be noted that they analysed the downside scenario as part of their going concern analysis under IFRS in connection with the audit of their annual financial statements and that entirely surprised, then, when we heard reports they consider the downside scenario unlikely. So don’t panic. However, their assumptions and conclusions do make for interesting reading. that some companies were looking at the 2 The recent Advantage Sales & Marketing bonds (which we understand have been postponed) mention coronavirus twice in the risk factors, but make no specific provision for it, or for disease outbreaks or public health crises generally, in the covenants. debtwire.com Debtwire Asia-Pacific COVID-19 Intelligence Highlights 22

25 Mar 2020 Vedanta’s EBITDA and credit quality will likely collapse without a swift recovery in commodity prices - Credit Report by Oliver Long and Terence Wong

Further information Vedanta Resources Limited (VRL), a at the top-level holdco, Volcan Investments Get in touch or read more diversified metals and mining, power Ltd. The vehicle through which USD billionaire generation and oil & gas producer, is likely Anil Agarwal owns what is labeled the Vedanta to experience a substantial credit profile Group (VRL, its 50.1% owned listed subsidiary Jessie Ma deterioration in the coming 12-18 months Vedanta Limited (VEDL) and all of VEDL’s because of the collapse in commodity prices. subsidiaries), has substantial cash needs in the Cross navigation content Just how bad things get will hinge on how long coming 18 months. requires an internet connection. the coronavirus pandemic shuts down the global economy. Continued VRL is facing a dire operating environment, Read the full story online because the vast majority of its EBITDA is generated from the production of oil and zinc, both of which have been routed of late. Barring Read more a rebound in the price of those commodities Debtwire projects that the company’s EBITDA could decline by around 50% in the next year, leading to skyrocketing leverage and potential cash flow issues. With the medium-term outlook from the novel coronavirus outbreak still largely unknown and VRL already close to pressing against loan- covenant compliance levels, the refinancing or repayment of USD 1.5bn of term loan maturities due within the 12 months to March 2021 as well as the USD 670m bonds due in June 2021 at the VRL holdco level could become very onerous. Amid the strong risk of collapsing EBITDA and refinancing challenges, the final ingredient for a perfect storm scenario is the liquidity needs

debtwire.com Debtwire Asia-Pacific COVID-19 Intelligence Highlights 23

25 Mar 2020 Flattening the curve of insolvencies – Australia’s COVID-19 insolvent trading reforms

by Ashley Bell

In a bid to avert an avalanche of insolvency While there remain concerns that the reforms egregious cases of dishonesty and fraud will mitigate the economic impacts of COVID-19; filings, Australia’s Federal Government will simply push credit risk down to suppliers remain subject to criminal penalties. [3] on Monday (23 March) enacted a range and result in a further tightening of credit, Second, companies will be granted greater the Australian Taxation Office advising that it of temporary amendments to Australia’s for now, investors in Asia can take comfort • protection from creditors seeking to recover intends to work with businesses struggling corporate insolvency laws to address the that any directors appointed over Australian debts through the statutory demand due to COVID-19 and will consider tax challenges faced by directors during the corporates – and any potential shadow procedure. For the next six months, creditors deferrals; and COVID-19 crisis. [1] directors – will have a longer window to will only be entitled to serve statutory determine an appropriate response to the the personal bankruptcy regime being In short, the chief reforms involve: demands in respect of debts above AUD • current challenges. amended in line with the corporate statutory 20,000 (an increase from the previous 1. a relaxation of Australia’s strict insolvent demand procedure by increasing the Buying more time – insolvent trading and threshold of AUD 2,000) and debtors will be trading laws to relieve directors from the risk of threshold for a creditor to initiate bankruptcy statutory demand relief provided with an extended six-month window personal liability in respect of debts incurred proceedings against an individual from to respond to any statutory demands (up from in the ordinary course of business over the The Australian government has implemented AUD 5,000 to AUD 20,000 and providing the previous window of 21 days). coming six months; and two key amendments. debtors with six months (rather than the Importantly, however, there is no blanket current 21 days) to respond to a bankruptcy 2. amendments to the statutory demand First, for the next six months, directors protection from creditor enforcement. notice. procedure to provide businesses with will be relieved of any potential liability for Creditors may still petition to wind up increased protection from creditors. insolvent trading under section 588G of the The amendments will take effect after companies which are unable to pay their Corporations Act (Cth) in respect of any debts they receive royal assent, but will not have The reforms have been welcomed by the debts as they fall due, as well as on just and incurred in the ordinary course of business. retrospective effect. Australian Institute of Corporate Directors equitable grounds. And given the objective of the amendments, and other stakeholders who were concerned Ameliorating Australia’s strict insolvent this protection will likely extend beyond Ancillary reforms that the existing safe harbour protections trading regime typical day-to-day transactions, to cover any introduced in September 2017 didn’t In addition, the reforms to the insolvent trading debts incurred to facilitate the continuation The government’s COVID-19 response was provide directors sufficient protection in prohibition and statutory demand procedure of a business, such as finance obtained to considered necessary to relax the strict duty the circumstances that have emerged since will be supplemented by: move a business online or to continue paying placed upon directors of Australian companies COVID-19 hit. All of a sudden, many companies employees. [2] the federal Treasurer being granted a new to avoid trading while insolvent. have found themselves without sufficient cash • power to exempt classes of persons from flows to service liabilities coming due, which Some uncertainty remains, however, given obligations under the Corporations Act, or to normally under Australia’s insolvency laws that the reforms contemplate further statutory Continued modify any such obligations, where it would would force directors to file for administration regulations being developed, potentially to Read the full story online not be reasonable to expect those people if only to avoid the risk of being found restrict the application of the relief in certain to comply with the provisions, or in order personally liable and potential subject to circumstances. In addition, companies will to facilitate the continuation of business or Read more imprisonment for allowing their company to remain liable for any debts incurred and any trade whilst insolvent. [1] Schedule 12 to the Coronavirus Economic Response Package Omnibus Bill 2020 (Cth) debtwire.com [2] Explanatory Statement to the Bill. [3] See Schedule 8 to the Bill. Debtwire Asia-Pacific COVID-19 Intelligence Highlights 24

27 Mar 2020 China’s injection of COVID financing gives developers, LGFV, leading industrials immunity to offshore-market contagion by Zhou Ping, Jane Jia, Gladdy Chu and Daisy Wu

Property developers, local government the average coupon for these recently issued CNY 680m anchor interest, said a company Commercial bank largesse, which normally financing vehicles (LGFV) and leading domestic property bonds tightened to 4.12% spokesperson. Instead, the Chongqing flows largely to SOEs, has now flowed to industrials are the Chinese sectors shown compared to 5.28% for notes from the sector government-owned coal, gas and power others as well. Rated B/B- logistics-and-trade- to have favored access to domestic debt as issued one year earlier, the tally shows. supplier obtained a CNY 1.4bn “coronavirus center developer China South City Holdings part of Beijing’s easing policies to counter loan” from three Chinee banks at a 2.95% announced obtaining CNY 2.6bn (USD 3.7bn) Early this week, Shimao Property’s Shanghai the COVID-19 economic impact, said five interest rate early this month, he said. Including long-term secured loans from Chinese banks Shimao Construction was able to print CNY international and three domestic bond subsidies, the actual cost to the borrower is in February, mostly with 10-15-year tenors. 1.7bn five-year notes at 3.23% and CNY 2.8bn investors, and five domestic debt bankers. actually even lower, he said. Their interest rates are 5.5%-6%, as reported. seven-year notes at 3.9%, as per a company These easing policies in China—the first disclosure. It needed to pay 4.3% for smaller The loan is an example of China’s effort to The plentiful domestic bank funding at a economy to suffer from a COVID-19 outbreak five-year tranches printed in September and fast-track low priced bank financing to virus- time that the offshore bond market is likely and already in recovery mode—will help its November 2019 and 4.8% for seven-year notes hit enterprises. The central bank set up a to remain closed to industrial names has companies tide over the possible persistent also issued in November. special CNY 300bn yuan low-cost refinancing encouraged oilfield-services company Hilong dislocation in the international credit markets, program on 31 January, which People’s Bank Holding and auto rental company Car Inc To a significant but lesser extent, the said the 13 credit market sources. It will Of China (PBoC) Monetary Policy Department to both say during their respective recent domestically generally popular LGFVs have also likely limit the increase in defaults and head Sun Guofeng said during a 16 March investor briefings that they will use credit lines also been actively tapping the onshore bond bankruptcies in China, said three advisory press conference had enabled 4,708 virus- to repay offshore bonds coming due within market. sources, dampening expectations of a surge of plagued enterprises to obtain a total CNY the next 12 months instead of planning for an mandates from the country. “As long as the company is offering many 182.1bn loans as of 13 March at an actual offshore issuance. people a job, and has a functioning business financing cost of 1.28%. China began rolling out the easing policies Hilong, which has USD 165m outstanding in its industry, that would ensure it gets a hand during the extended Chinese New Year holiday The Chinese central bank—the main policy bonds due in June, said during its 12 March from the government in a time like this,” said an and they have already encouraged a strong locus so far for countering the economic briefing that while the government requires international debt banker. flow of relatively low yielding domestic bond impact from the outbreak —has also domestic banks to increase liquidity “to real issuance from property and LGFV outfits, as Ample liquidity launched a series of other monetary easing businesses”, better quality companies will per a tally from Wind, a financial data platform. policies, including cutting the bank reserve benefit more from the policy, given that banks It has not just been the tradable debt market requirement ratio in January and March to remain selective. In the past six weeks, Chinese property either. In fact, cheap bank rates encouraged release CNY 1.35trn liquidity and injecting companies issued 130 domestic bond regional state-owned-enterprises to favor the CNY 1.7trn through open market operations tranches with aggregated principal of CNY bank loan market, particularly for industrial Continued in February. In addition, it has urged banks to 103bn, up from 72 tranches with CNY 71.8bn players. Read the full story online extend loans and tolerate late debt payments aggregated principal over the same period Indeed, Chongqing Energy Investment from companies affected by the COVID-19 one year earlier, when the international suspended its planned up-to CNY 1bn pandemic. Read more bond market was hyperactive. Seemingly three-year private corporate bond offering disregarding a severe fall in February pre-sales, even though it had provisionally attracted debtwire.com Debtwire Asia-Pacific COVID-19 Intelligence Highlights 25

01 Apr 2020 India’s first round of COVID-19 insolvency reforms aim to avoid a wave of new filings – COVID-19 Legal Impact by Ashley Bell

[Editor’s Note: In this new continuing series by six months. Yet such a move could prove Resolution timelines also extended imposed lockdowns significantly interfere with the Debtwire Legal Team, Debtwire’s global problematic -- after all, who exactly benefits progress – in light of the Supreme Court’s In addition, on 29 March 2020, the Insolvency team of restructuring lawyers and court from forcing insolvent companies to continue decision in Essar. and Bankruptcy Board of India took steps to reporters cover legislative and judicial efforts trading? And if directors are prevented from reduce the impact of the government-imposed Phase 2 reforms might be more drastic around the world to cope with the global handing the keys to a resolution professional lockdown on existing resolution processes pandemic in corporate restructurings.] -- no matter how bad a company’s financial None of these phase one reforms are too by excluding the mandatory lockdown period plight is – what exactly should directors do? controversial, but indications are that future from the timelines applicable to resolution reforms will be more significant. In advance of any further reforms being processes under the IBBI (Insolvency On 24 March 2020, the Indian government implemented, the Indian government might Resolution Process for Corporate Persons) Already, the Indian government has suggested followed Australia’s lead and announced need to give further thought as to how best Regulations (2016). that a second round of reforms might involve temporary amendments to its corporate to balance the need to protect temporarily the operation of sections 7, 9 and 10 of the insolvency regime to protect businesses The move will excuse creditors and resolution stressed but otherwise viable businesses, while Code being suspended for a period of six during the COVID-19 crisis. professionals from compliance with the allowing hopelessly insolvent entities to meet months if the COVID-19 situation has not Regulation’s model timeline for completion of a For now, the Indian reforms are less their fate. improved by 30 April 2020. That would mean resolution process, providing stakeholders with comprehensive than their Australian equivalent. no financial creditors, operational creditors Phase 1 reform: higher thresholds imposed additional time to (inter alia) submit and verify Both governments have sought to curtail the or debtors could commence resolution to commence resolution proceedings claims, prepare an information memorandum, ability of trade creditors to force companies proceedings over that period, no matter the invite expressions of interest and consider and into insolvency proceedings at a time when On 24 March 2020, the Indian government size of any default. approve resolution plans. businesses are facing unprecedented financial announced that the threshold for commencing From a distance, such a course of action, while stress due to the coronavirus and government- corporate insolvency resolution proceedings But the mandatory 330-day time limit drastic, appears logical; asking all stakeholders imposed lockdowns. The Indian reforms do not, under the Insolvency and Bankruptcy Code will remains in place to stand still during a crisis is often the first however, go so far as to relieve directors from be dramatically increased from INR 100,000 Importantly, however, the move by the IBBI step toward finding a solution which benefits the risk of personal liability for wrongful trading (approx. USD 1,350) to INR 10m (approx. USD does not automatically relieve stakeholders of all. But it could cause more problems than it in a bid to encourage them to restructure and 132,000). The move is similar in nature to the need to comply with the strict obligation solves. continue trading through the crisis. that recently adopted in Australia, where the under the Code to complete a resolution threshold for serving statutory demands was But while the first phase of India’s insolvency process within a maximum of 330 days. increased from AUD 2,000 to AUD 20,000. Continued reforms are largely uncontroversial, the Indian Unless future reforms provide such relief, Read the full story online government has signaled the introduction of The aim of the reform is straightforward: to resolution professionals will need to seek quite drastic future reforms if conditions fail shield small and medium-sized businesses extensions to that deadline directly from the to improve. In particular, the government has from a tide of claims from operational creditors, Read more National Company Law Tribunal on a case-by- suggested that all creditors, and even debtors, providing those businesses with more time to case basis. The NCLT likely retains a discretion might be precluded from commencing deal with the challenges posed by COVID-19 to grant such an extension in exceptional resolution proceedings for a period of and the 21-day lockdown announced by the circumstances – such as where government- Indian government on 25 March 2020. debtwire.com PaRR Coronavirus Impact Coverage Highlights 26

PaRR makes sense of the evolving legal and regulatory landscape and points the way forward for legal professionals, corporates and investors. PaRR Intelligence

Introduction

As economies worldwide reel from the fallout of COVID-19, PaRR has continued to deliver unrivaled insight into how regulators across the globe are handling the crisis. While the extent of the current crisis is unclear, there is no doubt that government agencies across the region will play a vital role in shaping Asia’s response to this unprecedented situation. From updates on China’s most closely watched merger reviews to the new enforcement priorities of Asian antitrust regulators, PaRR keeps readers ahead of the curve in terms of the evolving risk landscape. Notable developments to watch include a surge in price gouging complaints over the sale of products such as surgical masks and hand sanitizers, while data protection regulators in Hong Kong, Singapore and the Philippines are also receiving numerous complaints related to the COVID-19 pandemic. PaRR provides law firms, companies and investors with news, data and analysis in the areas of competition law, anti-corruption enforcement, data privacy, cybersecurity and sector-specific regulatory change. Below is a selection of our recent coronavirus- related coverage, highlighting how different government agencies are reacting and coping at this pivotal stage.

parr-global.com PaRR Asia-Pacific COVID-19 Intelligence Highlights 27

24 Feb 2020 China’s local antitrust enforcers focus on price gouging amid coronavirus outbreak by Kimberly Jin and Lisha Zhou in Shanghai and Qianwen Lu in Beijing

Further information • Facemasks, sanitizers under spotlight after some cases suspended, the source added. and AUCL enforcement, agency sources said. Get in touch or read more price hikes Staff mobilized This may be due to the fact, according to one Officials mobilized as part of wider source familiar with the situation, that officials • Some local AMR staff are also being mobilized Sarah Keung government effort at Beijing’s Xicheng District AMR have not as part of broader government campaign to been mobilized to assist in the government’s tackle the outbreak, sources in Shenzhen, campaign outside of the office. Cross navigation content Shanghai, Jiangsu and Hangzhou told Traditional antitrust enforcement at the local requires an internet connection. PaRR. Tasks include assisting local police to Antimonopoly Bureau level across China has been forced to take prevent crowds of people gathering in public, a back seat as officials monitor the price SAMR’s Antimonopoly Bureau resumed work conducting body temperature checks in of in-demand products such as facemasks on 3 February and since price supervision is commercial areas and supervising the price of and sanitizers amid the ongoing coronavirus the responsibility of a different department, key medical supplies, the sources said. (COVID-19) outbreak, several sources familiar traditional antitrust enforcement at the central with the matter told PaRR. Normal AMR operations in Hangzhou including level such a merger control has not been company registrations have all been halted, a affected greatly. However, the agency is not The State Administration for Market Regulation source said. conducting any face-face meetings with (SAMR) announced seven batches of companies or lawyers, according to a source administrative penalties for price gouging on 12 Zhangjiagang AMR, a city market regulator familiar with the situation. February by local AMRs in multiple provinces in Jiangsu province, has also suspended across the country. Most were imposed routine AUCL inspections, in part due to Merger filings are done through an against local pharmacies and supermarkets for a sharp decrease in number of consumer online platform, via email or courier while selling facemasks and other medical supplies complaints about unfair business practices communication is done by email or telephone, significantly above their normal retail price. during the epidemic, another source told a competition lawyer told PaRR. PaRR. In addition, given many companies have China’s local Administrations for Market While policy work is being conducted as just resumed production after an extended Regulation (local AMRs) generally run antitrust normal, new antitrust investigations are Chinese New Year shut down due to the virus enforcement and price supervision activities unexpected for now as officials are unlikely to outbreak, government officials are not keen to from the same unit and these officials are now conduct dawn raids at the moment, according hamper their operations, the source added. focused on the price of virus-related medical to the source. supplies along with other products related to However, some local AMRs are continuing daily life such as foodstuffs, said one source. to pursue monopoly and competition cases. In addition to processing a large number of This means Anti-Monopoly Law (AML) and price related consumer complaints, Jiangsu Anti-Unfair Competition Law (AUCL) related provincial AMR and Beijing’s Xicheng and investigations—such as commercial bribery Fengtai district AMRs are still engaged in AML cases—have slowed down considerably or in parr-global.com PaRR Asia-Pacific COVID-19 Intelligence Highlights 28

09 March 2020 Asia Desk: Competition agencies face barrage of consumer complaints as coronavirus prompts profiteering by Freny Patel, Leo Galuh, Joyce Chen and James Galvez

With the outbreak of the novel coronavirus the outbreak. also look if there is any producer or distributor and Industry (MIT) and the Competition (COVID-19) prompting price increases of intentionally hoarding masks. and Consumer Commission of Singapore to After a “thorough investigation,” and having personal hygiene products like masks and monitor the situation. summoned manufacturers and distributors, On 22 January, the TFTC published a notice hand sanitizers, complaints about price the Indonesia Competition Commission (ICC) warning that any anticompetitive agreement Competition authorities in India and the gauging are pouring in across Asia. But found no anticompetitive conduct in the sale to hoard or manipulate the price of masks will Philippines on the other hand, are seen taking the question is whether this is a matter of face masks, stating on 4 March that none be severely punished and parties could be a passive approach, and perhaps rightly so. A for competition agencies, or if — as many of the manufacturers it spoke with had hiked subject to criminal prosecution. former antitrust official from the Competition people contend — the surge in prices can be prices illegally or restricted supply. Commission of India (CCI) told this news explained by the sudden excess demand and Meanwhile, to discourage market and price service that temporary spikes in prices are not hoarding. Indonesia is facing a shortage of N95 masks, manipulation during the epidemic, the South something any machinery of competition law with prices having shot up almost four times Korean government has set up a joint task While prices have spiked on the back of can investigate given the time an investigation in recent weeks. A box of 20 N95 masks is force consisting of the Ministry of Food and panic buying and the irrational stockpiling of usually takes. He added that excessive pricing currently priced at IDR 1,500,000 (USD 109) Drug Safety (MFDS), the Korea Fair Trade household necessities, some manufacturers of is not covered under India’s Competition Act. as opposed to the pre-coronavirus price of Commission (KFTC), the National Tax Service masks are cashing in on the surge in demand IDR 400,000 (USD 29.1), according to media (NTS), as well as municipal and provincial Similarly the surge in prices of disposable by jacking up prices. There is a fine line reports. The public believes that wearing N95 health and safety offices, to monitor the masks remains outside the purview of the between legal profiting in a time of significant masks can prevent the spread of the virus, with market for possible hoarding of masks and Philippine Competition Commission (PCC) shortages and illegal profiteering by creating N95 signifying masks which can block even hand sanitizers, as well as other household as profiteering and hoarding fall under the supply shortages through hoarding. the smallest particulates. necessities. Effective 5 February, any individual Department of Trade and Industry (DTI). On the Though excessive pricing is prohibited found hoarding such products will face back of complaints of overpricing, the agency Indonesia is not alone, as its counterparts in under competition law in most jurisdictions, a maximum prison term of two years or a warned pharmacies and medical suppliers Taiwan and Korea started to monitor possible the difficulty in proving the conduct is maximum fine of KRW 50m (USD 42,108). not to take advantage of the sudden spike collusion among mask manufacturers after anticompetitive results in few antitrust The law will be in place until 30 April. It is in demand for surgical masks — at the risk of they were flooded with consumer complaints. agencies taking enforcement actions. This is anticipated that the coronavirus will dissipate facing penalties. The government has however, despite the fact that from a consumer point While there have been no indications that the as temperatures warm with the approach of increased the price ceiling for disposable of view, excessive pricing -- like price-fixing -- Taiwan Fair Trade Act has been contravened, Spring. masks given the rising costs of raw materials. affects individuals’ purchasing power. the Taiwanese antitrust authority intends to Similarly Singapore, a region that felt ensure against any price collusion, Taiwan Fair Competition agencies across the region the affects of the virus very soon after it Trade Commission Vice Chairman Shaw-jin appear to have taken different positions on appeared in China, has witnessed hundreds Continued Perng told Asia Desk. Since 31 January, the whether price gouging is an antitrust matter of complaints alleging overpricing of masks, Read the full story online Taiwanese government has “expropriated all even as the UK’s Competition and Markets thermometers and hand sanitizers. The masks” and the Ministry of Economic Affairs is Authority (CMA) warned last week that it was Consumers Association of Singapore (Case) actively controlling mask supply in the region, Read more monitoring sales and pricing practices during is closely working with the Ministry of Trade he explained, adding with that, the TFTC can parr-global.com PaRR Asia-Pacific COVID-19 Intelligence Highlights 29

13 Mar 2020 Shipowners send out SOS on new low-sulphur marine fuel limits due to pandemic by Freny Patel in Mumbai, James Konstantin Galvez in Manila, Lisha Zhou in Shanghai, Leo Galuh in Jakarta and Jeremy Fleming-Jones in Brussels

• Chinese shipowners seek temporary relief shipping operators and help through the related to the implementation and enforcement suppliers, and other concerned entities in the until June difficult patch, an association source told of the relevant IMO instruments, given the public and private sectors, it said. By 2025, PaRR. While the association did not specify severe public health challenges brought about 100% of all Philippine domestic ships will be Philippines expected to be 100% compliant • the number of months, the source suggested by COVID-19, as the coronavirus is known. IMO fully compliant with IMO’s sulfur cap, it added, by 2025 a freeze until the end of June, which is the member states which need to raise issues in explaining that this approach aims to ease • IMO meetings deferred due to coronavirus timeline suggested for the other proposed relation to enforcement are expected to lodge the cost impact of IMO 2020 on domestic measures. Other measures suggested by the formal registrations or notifications, and it is shipping companies and give oil suppliers time association included reducing or exempting understood none have yet been lodged. to ensure sufficient supply of compliant fuel. Shipowners in China have asked the State some relevant fees and providing shipping Meanwhile, the IMO announced on Thursday The DOE earlier told this news service that Council to lobby for the International Maritime companies financing support, according to the (12 March) its plans to defer meetings originally the Philippines has sufficient fuel supplies to Organisation’s sulphur emission limits of 0.5% source. scheduled for the month of March and early comply with lower sulfur content standards. to be “temporarily shelved” for several months, The proposed suggestion of temporarily April due to the outbreak making it difficult for in response to the coronavirus, while many An Indonesia-based shipping source told suspending the low sulphur emission norms delegates from member states to travel. shipowners in Indonesia and the Philippines PaRR that his company continues using should be applied to carriers plying local are sustaining 3.5% sulphur emission levels, While China implemented the IMO 2020 3.5% sulphur fuel because the Ministry of waters as well as those sailing in internationally, according to four sources close to the Sulphur emission 0.5% standards as of 1 Transportation has not given more detailed the association source said. The State Council situation. January 2020, Indonesia and the Philippines regulations on pricing of 0.5% emission fuel, has yet to respond to the association’s have yet to do so. which would have increased the sector’s costs Since the beginning of this calendar year, the request, he added. by 10% to 20%. International Maritime Organization’s (IMO) The Philippines’ Maritime Industry Authority Trident Alliance Chair Roger Strevens told International Convention for the Prevention (Marina) told PaRR in an email that at least PaRR previously reported that Indonesia PaRR that the coronavirus does not present of Pollution from Ships (MARPOL Convention 70% Philippine-flagged vessels plying intends to selectively implement IMO any grounds for reversion to the old 3.50% Annex VI) directive has been in force, ratified overseas routes are compliant with IMO’s low regulations as it needed “time to adjust,” sulphur standard. Strevens suggested by over 90 countries including China, sulphur fuel requirements and that domestic citing the spokesperson of the Directorate that the cost and burdens associated with Indonesia and the Philippines. To reduce ships would continue to comply gradually. The General of Sea Transportation. He did not say reimplementing the target sulphur emission sulphur oxide (SOx) emissions from ships, Philippines has 119 overseas ships under its how much time was required, but noted that level from 3.50% to 0.50% for a second time the IMO directed the amount of sulphur in registry. all Indonesian-flagged vessels sailing within would likely prove unattractive to shipping maritime fuel oil to be reduced to 0.50% m/m Indonesian waters can continue using fuel with companies. The authority went on to say that it has (mass by mass) from 3.5%. 3.5% sulphur-content “until it runs out”. completed the roadmap, providing a transition An IMO spokesperson declined to comment Temporarily shelving the low sulphur emission plan for domestic shipowners to comply with on any specific countries. However, according norms was one of the many measures IMO’s sulfur cap within the next five years. to a letter dated 19 February, the IMO advised suggested by The China Shipowners This phased approach has been developed member states to be understanding and adopt Association to the State Council on 21 with the help of the Philippine Department close cooperation to overcome challenges February to ease the burden on Chinese of Energy (DOE), shipping companies, oil parr-global.com PaRR Asia-Pacific COVID-19 Intelligence Highlights 30

20 Mar 2020 Asia Desk: SAMR’s review of complex deals not impacted by COVID-19 by Lisha Zhou

Asia Desk is a weekly column providing clear the Hitachi Chemical/Showa Denko deal, Novelis deal, with a duration of 16 months, was have submitted their remedies to SAMR, commentary on regulatory and policy ahead of other jurisdictions. refiled twice after the deal was transferred which launched market tests immediately. It developments across the region. The opinions from simple case to normal case procedure seems there are still some issues that need Difficult deals expressed here are those of the writers only. due to industry complaints. to be further addressed. SAMR is mulling a During the height of the epidemic, the hold separate remedy on this deal and has However, SAMR did not use the full three agency conditionally cleared Danaher’s communicated this with the companies. The stages of the new review term after the refiling. The review of complex mergers by China’s proposed acquisition of General Electric’s (GE) ball is now in the companies’ hands whether or SAMR cleared the Aleris/Novelis deal in State Administration for Market Regulation biopharma business after eight months of in- not to agree to a hold separate remedy. the first phase after the second refiling and (SAMR) has not been impacted by the depth review. The deal, along with the Aleris/ cleared the GE/Danaher deal in the second A hold separate remedy is normally imposed coronavirus with several high profile tech deals Novelis deal which was conditionally cleared phase after the first refiling. on horizontal mergers where structural proceeding well into remedy talks recently. by SAMR in late December 2019, were viewed remedies are necessary but companies may by China-based competition lawyers as “highly The conditional clearance of these two difficult As reported by this news service, Mellanox/ lose synergies if they agree to divest core risky deals.” deals showed that even if a deal encounters Nividia and Cypress/Infineon have all businesses. In China’s merger review history, strong opposition from industry or results submitted remedies to SAMR and the agency The GE/Danaher deal has high concentrations the AMB has imposed hold separate remedies in very high concentrations it can still win is conducting “market tests” on the remedies. - combined market shares up to 85% - in 10 in 10 cases, among which eight cases were approval from SAMR as long as the parties SAMR ordered a tight timeline to third parties relevant products, out of the total 25 relevant horizontal. Only the Lucite International/ come up with sufficient remedies. to respond to the remedies as the agency products, according to the SAMR decision. Mitsubishi Rayon (cleared in April 2009) and hopes to wrap up deals as quickly as possible. The Aleris/Novelis deal was also said to have SAMR could possibly ask the State Council the recent Zhejiang Garden Bio-Chemical encountered strong opposition from Chinese to render a decision on a deal if industry High-Tech (ZGBH)/Royal DSM (cleared in SAMR also confirmed in a press release last industrial third parties including an industrial opposition is significant and cannot be October 2019) were horizontal deals that had Friday that its Antimonopoly Bureau (AMB) regulatory agency. addressed by remedies. some vertical elements. received 37 merger filings since 3 February when the agency resumed work after the The aluminum merger will create an entity with New play on ‘hold separate’ However, in the Lucite/Mitsubishi deal, the extended Chinese New Year holiday. It formally a combined market share of 70%-75% in the hold separate was only imposed on the SAMR still has several high profile tech deals initiated 45 case reviews and closed 45 cases, aluminum automotive body sheet (ABS) inner structural remedy target before completion in hand. In addition to the Mellanox and with average closing of two cases per business plates market and with 75%-80% market share of the divestment. Therefore, it appears well Cypress deals, Wabco/ZF, and Acacia/Cisco day, which “greatly supported company M&A in the aluminum ABS outer plates segment. within reason. In the ZGBH/Royal DSM deal, are ongoing. activity.” Following the deal, the main competitors would be reduced from five to four in the Chinese According to this news service’s report, most Compared with the 48 cases unconditionally Continued market for aluminum ABS inner plates and deals have not raised major concerns and are cleared in December 2019, the speed of Read the full story online reduced from three to two in the aluminum on a normal track. clearances has not slowed so far this year. This ABS outer plates market. service further found that SAMR only required The Mellanox/Nvidia deal alone was refiled in Read more two days after the public notice period to Both deals have been refiled. The Aleris/ February. Following the refiling, the companies parr-global.com PaRR Asia-Pacific COVID-19 Intelligence Highlights 31

23 Mar 2020 Asia Desk: Antitrust investigations in Asia Pacific caught in COVID-19 pandemic by Freny Patel, Joyce Chen, James Konstantin Galvez and Leo Galuh

Asia Desk is a weekly column providing Commission (PCC) has frozen the 30-day equally applicable to queries raised in ongoing Hong Kong’s Competition Commission commentary on regulatory and policy window within which companies had to submit antitrust investigations. With the Indian on Friday (20 March) announced it has developments across the region. The opinions merger filings once they signed definitive government having cancelled international commenced proceedings related to the expressed here are those of the writers only. agreements. Parties will now have more time visas, the scheduling of depositions and prosecution of a text book cartel. The authority to file with the authority. Pre-notification ongoing investigations have been affected. announced in February that it reduced the consultation will continue, although responses The authority has adjourned all matters listed number of working hours and today (23 Many Asian countries remain in lockdown will be over email or conference calls until for hearing until 31 March. Hence while the CCI March) declared that its office has been mode on account of the pandemic, with the normal operations resume. is moving at full speed to review mergers, it has temporarily closed until further notice. Its virus having a rippling effect on antitrust stopped investigating anticompetitive conduct spokesperson previously told this news service In contrast, the Indian competition authority investigations and the merger review process in light of the coronavirus impeding day to day that precautionary measures taken by the is working intensely to review mergers in Hong Kong, India, Indonesia, Malaysia and operations. This means the CCI will not likely Commission to reduce the risk of spreading applications as the financial year comes to a the Philippines, where regulators are working be conducting dawn raids at the moment. the virus has resulted in the need to delay close. M&A deals are fairly time-bound and with skeleton staff -- or from home. some investigations. often parties want to close transactions before CCI Chairman Ashok Kumar Gupta told Asia With more and more businesses and the close of the financial year, which for India Desk that while the situation is “dynamic”, The investigation of the Hong Kong governments adopting work from home (WFH) is 31 March. This explains why many parties things are currently normal in terms of Seaport Alliance has seen some delays. The and home quarantine rules, decision-makers have asked the Competition Commission of functionality but “still evolving”. Last Thursday Commission is now aiming to complete the are often unavailable to sign off on regulatory India (CCI) to process merger applications (19 March), the state ordered staggered investigation within the first half of 2020, said submissions. Such challenges call for a greater pertaining to domestic deals at the earliest. working hours for central government the spokesperson; while its Chief Executive degree of flexibility to minimize disruptions and employees and that they should work from Officer Brent Snyder previously told the While the CCI continues to accept and understand the inevitability of delays. home every alternate week in a move to Legislative Council that the agency expected review merger filings, it has hinted to parties contain the epidemic. This could, however, to wrap its probe of the alliance in the first Approval for mergers and acquisitions that they should defer non-urgent filings. In impact review timelines and parties to mergers quarter. (M&A) in countries like the Philippines has June 2017 the CCI did away with the 30-day can expect further delays. come to a grinding halt as the competition deadline. Parties to a merger can wait until It is business as usual in Taiwan and Indonesia authority announced last Monday (16 normal operations resume before filing with The Malaysia Competition Commission (MyCC) — for the moment. March) that it would not accept any merger the authority since India too has declared has temporarily closed its office, with the review applications until 14 April or when the a lockdown with the growing number of COVID-19 outbreak having affected one of community quarantine is lifted. This will have COVID-19 cases detected. its staff and the recent Movement Restriction Continued a negative impact on deal closures and deal Order announced by the Prime Minister Read the full story online In the case of M&A deals where one aspect of values, as well as the potential to “contemplate last week. While the authority has closed its the transaction pertains to jurisdictions outside carve-outs” for parties to global deals office until 31 March, it continues to receive India which are in total or partial shutdown Read more requiring approval from the Philippines. complaints with a few of its officers available mode, parties have requested more time to on standby. On the bright side, the Philippine Competition respond to queries raised by the CCI. This is parr-global.com Dealreporter Asia-Pacific COVID-19 Intelligence Highlights 32

Dealreporter’s news and data covers mergers and acquisitions, special situations and Equity Capital Markets (ECM) in real time. Dealreporter Intelligence

Introduction

Dramatically widening deal spreads, financing risk, aborted indicative offers, regulatory and administrative delays – the past month has seen M&A hit by the perfect storm. The collapse of equity markets in Asia and globally, and continued uncertainty about the depth of the impending global recession has created huge uncertainty for all but the most strategic of acquirors. Not since 2008 have dealmakers and investors poured over merger agreements to examine material adverse change (MAC) clauses to such an extent. One example is EQT Infrastructure’s NZD 7 per share offer for retirement village provider Metlifecare [NZX:MET, ASX:MEQ]. On 8 April the private equity firm pulled out of the agreed deal citing a breach of the MAC clause. Metlifecare responded saying that EQT does not have a lawful basis to terminate the deal. Amidst all the uncertainty and inflated macro risks it is notable that spreads involving some definitively agreed deals have recovered in recent weeks. For example, having ballooned out to around 7% in mid-March, the deal spread for Showa Denko’s highly leveraged acquisition of Hitachi Chemical has narrowed right back to less than 0.5% as of early April. Meanwhile, China Oceanwide’s near four-year pursuit of Genworth Financial is also a case in point. The spread, unsurprisingly, remains volatile but our reports suggest it is mispriced. There is no question that corporates and investors are suffering. But as our 3 April report on ASX listed emergence capital raise candidates shows, there is also a lot of opportunity in this market for bold liquidity providers and for the well informed hedge fund.

dealreporter.com Dealreporter Asia-Pacific COVID-19 Intelligence Highlights 33

10 Mar 2020 Genworth suitor China Oceanwide continues to see value in deal, source says by George Shen in Shanghai with additional reporting by Yiqin Shen in New York

China Oceanwide remains committed each regulator, while also making the overall to the original funding plan and filed it with Futhermore, the acquisition provides a rare to closing its long-pending acquisition of transaction fair and acceptable to all regulators state insurance regulators. opportunity for China Oceanwide to materially Genworth Financial [NYSE:GNW] despite and the stakeholders they represent.” accelerate its strategic transformation. Going Since signing the deal in 2016, China turmoil in global markets and other macro forward, a deal like Genworth is unlikely to be The transaction is also subject to clearance Oceanwide has said it is interested in buying uncertainties, said a source familiar with the replicable in terms of executability considering by China’s currency authority the State Genworth to bring long-term care insurance matter. the capital control measures China has Administration of Foreign Exchange (SAFE). to China. The deal also aligns with China imposed on outbound investments and a The Chinese investment group is well aware The status of the SAFE process could not be Oceanwide’s ongoing strategic transformation tougher US national security policy, the source of the Richmond, Virginia-based insurer’s learned. from a property investor to become a financial said. strength and weaknesses and has a clear conglomerate. China Oceanwide and Genworth said in the roadmap to leverage the company’s expertise Had China Oceanwide wanted to get out of 2 March announcement that they are aiming As long as the strategic value remains, in long-term care insurance and to fast-track the deal, it could have walked away when the to close the deal by 31 March, the current China Oceanwide Chairman Lu Zhiqiang is a rollout of this business in China and other parties were working on securing clearance end date for the repeatedly extended merger determined to implement the Genworth deal, emerging economies, the source said from CFIUS, the source said. China Oceanwide agreement. according to the source. and Genworth agreed to extensive mitigation Earlier this month, Genworth announced that Even with Genworth trading well below The source said that Genworth’s mortgage measures to secure approval in 2018. it had reached an agreement in principle with the USD 5.43 per share offer price, China insurance business in the US provides a stable China Oceanwide and the New York State The parties likewise agreed to sell Genworth’s Oceanwide is not looking to revise its bid, said cash flow due to the scarcity of its license. The Department of Financial Services for Genworth stake in its valuable Canadian mortgage insurer the source. The companies first announced company has been deleveraging and its long- to commit an additional USD 100m to its Genworth MI Canada [TSX:MIC] in 2019 after their deal in October 2016. term care business is scaling down, the source New York domiciled insurance subsidiary as Canadian authorities declined to move forward added. part of the regulator’s approval of the China It would not make sense to consider re-pricing with clearing the original deal. Proceeds from Oceanwide deal. the deal given the parties have navigated so Genworth and other long-term care insurers the sale have helped Genworth reduce its many challenging regulatory hurdles including have faced large losses in recent years after debt. The parties previously agreed in 2018 to inject the Committee on Foreign Investment in the policyholders used the insurance at higher USD 175m in additional capital to Genworth’s Asked about risks connected to the global US and China’s National Development and rates than expected when policies were sold Delaware insurance subsidiary to secure coronavirus outbreak, the source said this Reform Commission. Pricing and funding decades ago. As a result, regulators have clearance from that state. is unlikely to impact Genworth’s long-term plans are part of the companies’ filings with pushed insurance holding companies to care business. Low interest rates are more Genworth and China Oceanwide said they regulators, the source explained. provide additional capital to their subsidiaries worrisome for insurers with annuity products, are now providing additional information to that underwrote long-term care policies. This China Oceanwide will fund the USD 2.7bn the source said, though Genworth has limited Genworth’s other state regulators about the lesson will benefit China Oceanwide in its deal using its funding Plan B, said the source. exposure to this product. New York commitment. Genworth CEO Tom efforts to design long-term care products for This plan will see a mix of onshore funding McInerney told investors in February that the China, the source said. Genworth and China Oceanwide declined to and offshore funding, the source said. The companies are “acutely aware of the careful comment. company developed this plan as an alternative balance we need to strike to accommodate dealreporter.com Dealreporter Asia-Pacific COVID-19 Intelligence Highlights 34

02 Apr 2020 Asia Flash: ASX-listed COVID-19 capital market candidates with medium-term catalyst potential by Stephanie Hanna, Vivian Wong, and Derek L

Editors of this news service make deal, trend announced raisings of AUD 346m and AUD Exxon Mobil [NYSE:XOM] and courted by Pincus and Gaw Capital. But NSR may also and pre-event observations based on public 156m respectively. Woodside Petroleum [ASX:WPL], the PNG see market turmoil affect its liquidity and cash domain info and market chatter. This raw data focused oil company has seen its shares fall flows in the coming months due to higher These capital raises have seen Bain is combined with proprietary insights and more than 57% since the beginning of March delinquency rates on rent receivables. The Capital take up to a 16% stake in Webjet and commentary to produce an exclusive report due to oil price crisis. It has a 2.9x interest company’s cash to short term debt ratio HMI Capital LLC (HMI) raise its stake potentially that offers insight, and short- and long-term coverage ratio but slumping oil prices may stands at 0.6x while its current liabilities are to 25% from 19% in oOh!Media and acquire a actionable ideas. (No investment action deteriorate earnings further and hinder Oil almost doubled that of current assets. Shares board seat. Both deals are subject to foreign should be taken without further investigation). Search’s ability to generate enough cash to in NSR have dropped to AUD 1.62 from around investment approval. meet its interest payments alongside short AUD 2 since prior to official news of the recent Short term balance sheet woes amongst At the beginning of the year both Webjet and term obligations. UBS analysts have reportedly bid interest. Australian-listed companies are providing oOh!Media were considered financially healthy said the company may be forced to raise attractive investment opportunities for Stockland [ASX:SGP]. The top tier diversified companies in consolidating sectors and as equity if the current lowly oil price environment strategically minded entities. property developer which owns shopping such highly credible takeover targets. persists. centres, industrial parks and residential real A slew of ASX-listed companies have On the heels of this activity, the Asia Flash Scentre Group [ASX:SCG]. The shopping estate is facing unprecedented challenges withdrawn earnings guidance in recent weeks selected certain technical and valuation mall operator under the Westfield brand in reflected by a 55% drop in its share price as a result of uncertainties relating to the indicators as well as unofficial and official news Australia and New Zealand has been put to since the beginning of March. Stockland has coronavirus pandemic that has resulted in the flow to identify similarly profiled companies severe financial test as stores are forced to withdrawn its FY20 guidance amid market leading Australian stock indices falling 20% that may see a short-term capital raising event shut down due to Covid-19 and renters are uncertainties. over the past month. followed by a medium-term corporate catalyst, seeking rent relief. Scentre’s shares fell over As of latest half year results ended 30 Stock price falls and earnings warnings are such as a takeover. 50% since the beginning of March and on December 2019, the company has total debt being followed by emergency capital raisings 20 March it suspended its outlook for FY20 Asia Flash looked for evidence of short term of AUD 4.75bn against cash available of AUD involving retail and institutional shareholders as due to “market uncertainties”. The AFR has balance sheet distress by screening for 245m. The company has an interest coverage well as placements to private equity firms. noted the company may have to sell assets share price drops, news flow around earnings ratio of 3.04x which may deteriorate as income or fundraise to shore up under unforeseeable Two notable recent capital raises have involved guidance, low liquidity to short term debt, slumps. Its current assets only represent 0.36x market conditions. With its current assets companies that are both highly exposed to interest coverage, and cross referenced of its current liabilities. representing 0.1x of its current liabilities and the coronavirus pandemic but also credible that with our lapsed deals database, interest coverage of 1.6x, company liquidity takeover targets in the medium term. rumoured takeover targets and companies in looks tight with USD 900m of debt expiring in Continued consolidating sectors. Following respective year to date stock price July. The group’s AGM will be held on 8 April. Read the full story online declines of 78% and 82% and earnings The screening process generated the following National Storage Reit [ASX:NSR]. Until guidance withdrawals, online travel business names: recently, the self-storage provider was subject Read more Webjet [ASX:WEB] and out of home advertising Oil Search [ASX:OSH]. Long rumoured a to takeover interest from Public Storage company oOh!Media [ASX:OML] have takeover target for Total [EPA:FP] or possibly [NYSE:PSA] and private equity players Warburg dealreporter.com 35

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