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China South City’s Temporally Subordinating Consent Solicitation Tactics

China South City

Reorg Asia Highlights: China South City Holdings Ltd.’s, or CSC, December 2023 consent solicitation is being challenged by an Ad Hoc Group, or AHG, of its USD noteholders; The dispute centers around whether CSC can, as it has done, accept the consents of its July 2024 notes while waiving the condition that it receive valid consents to effect the proposed amendments with respect to other four tranches of USD notes subject to the consent solicitation; The commercial impact is that the July 2024 notes are temporally subordinated to the other four tranches of USD notes, which would not have occurred if the consent solicitation was approved across all five tranches of USD notes as envisaged under a “single proposal” structure; and Reorg considers the structure of CSC’s consent solicitation, its conditions alongside the waiver and consent revocation mechanics. CSC’s consent solicitation may be of interest to market participants, given the company announced it had accepted the requisite consents from holders of its July 2024 notes and had waived the condition that it receive valid consents to effect the proposed amendments with respect to the other four tranches of USD notes subject to consent solicitation. This maneuver resulted in the July[...]