(Bloomberg) -- A Chinese bank that backed Tewoo Group Co.’s dollar bond made an interest payment on its behalf, in a sign of worsening finances at the distressed commodities trader.
Industrial and Commercial Bank of China Ltd. transferred $7.875 million to repay interest due December 1 on Tewoo’s $500 million dollar bond due 2020, the company said in a filing to the Singapore stock exchange on Tuesday. ICBC had provided a standby letter of credit (SBLC) on the note -- which is effectively a pledge to repay if the borrower can’t.
This is the first such payout since June on an offshore bond from a SBLC provider, when troubled conglomerate China Minsheng Investment Group Corp. received a similar backstop from China Construction Bank Corp.
Tewoo has five other outstanding dollar bonds with combined principal amount of $1.55 billion, which are without SBLC providers. That includes a $300 million bond due on December 16. The company has managed to pay its offshore debt so far but its subsidiary Tianjin Hopetone Co. missed a coupon payment on its 1.21 billion yuan note in July.
The company said earlier this month that it will appoint Tianjin Jincheng State-owned Capital Investment and Management Co. to manage its offshore debt. The company plans to take a series of debt management measures, including an exchange offer, it said without elaborating on the steps.
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