Exclusive: Chipmaker Tsinghua Unigroup Set to Meet Bondholders as Interest Comes Due

What’s new: Chinese chipmaker Tsinghua Unigroup Co. Ltd. plans to hold bondholders’ meetings next Monday and Tuesday for two of its bonds — a 5 billion yuan ($760 million) bond and a 750 million yuan bond — to calm bondholders, Caixin has learned from sources with knowledge of the matter.

The 5 billion yuan bond, issued on Dec. 7, 2018, came with a five-year maturity at a coupon rate of 5.2%. Next Monday, Tsinghua Unigroup is scheduled to pay 260 million yuan in interest to the holders of the bond.

The 750 million yuan bond was issued at a coupon rate of 5.85% with a five-year maturity and will come due on March 27, 2022.

The sources told Caixin that the company and bondholders will likely negotiate on a few matters, including having Tsinghua Unigroup increase its pledged collateral, ensuring repayment protection measures, and regularly disclosing the company’s financial status and repayment progress.

What’s the background: Tsinghua Unigroup, founded by China’s prestigious Tsinghua University in Beijing, is a key player in China’s national push for self-reliance in semiconductors. The company has obtained solid support from the state in developing its chip business.

The company has been struggling with a liquidity squeeze and defaulted on a bond last month.

At the end of September, Tsinghua Unigroup’s liabilities totaled 52.8 billion yuan, more than 60% of which was short-term, compared with a cash level of 4 billion yuan, according to a report (link in Chinese) released on Nov. 5 by China Chengxin International Credit Rating Co. Ltd.

The company holds both yuan- and dollar-denominated bonds and faced maturing debt of 1.3 billion yuan and $450 million by the end of the year, with an additional 5.1 billion yuan and $1.05 billion of bonds set to either mature or be bought back during the first half of next year, according to the report.

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Contact reporter Timmy Shen (hongmingshen@caixin.com) and editor Marcus Ryder (marcusryder@caixin.com)

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