eHi Car Gets $400M One-Year Offshore Issue Quota in May for Bond Refi, to ‘Leverage Liability Management Tool’ to Refi $269M Due 2026 Notes; Co. Signs CNY 1B Onshore Bilateral Loans in 2024

Management of eHi Car Services Ltd. told fixed income investors this afternoon that it has obtained this month $400 million offshore issuance quota from China’s NDRC for bond refinance purposes and will “leverage liability management tool” to refinance its outstanding $269 million 7% due September 2026 notes, according to two sources briefed by company management.

The Chinese rental car company’s management, which was speaking to investors during a call, said the $400 million quota obtained from China’s National Development and Reform Commission is valid for one year and will be sufficient for eHi’s bond refinancing needs, said the sources who attended the call.

Management said a feasible refinancing plan for the due 2026 notes will be based on investors feedback, and its own financials and operating cash flows, sources said citing the call. The due 2026s were indicated in the low-70s, according to Solve Advisors. 

In March 2024, eHi launched an exchange offer for its then outstanding $381 million 7.75% notes due November 2024 with a concurrent new notes issue. The company later that month issued $325 million 12% due 2027 notes including $283 million in exchange for $337 million of the old due 2024 notes and $42 million new money. 

Management also said it will perform open market repurchases of its offshore notes. On March 27, the company announced that it had bought back around 10.3% of its originally $300 million 7% due 2026 notes. Management said today it also bought back 2% of its originally $325 million 12% due 2027 notes. eHi does not have any bond maturing in 2025.

Management told investors on today’s call that eHi will continue deleverage efforts and adopt more prudent management of its capital expenditures to support debt repayment and bond repurchases.

As Octus detailed in the May 1 report of eHi’s full-year 2024 financial results, which were not publicly available, the company reported a negative equity position of CNY 76 million on its balance sheet.

As of now, there is no shareholder capital injection plan for the purpose of curing the company’s negative assets, sources said citing management. But the company said it will move forward with its U.S. IPO preparation at an appropriate market window.

eHi currently does not have any offshore loans, sources said citing management. There are no debt covenants related to its negative book equity value, nor does the negative asset have any impact on the company’s ability to obtain or roll over its bank loans, sources added.

On today’s call, eHi management said as of the end of 2024, the company’s current bank borrowings stood at CNY 802 million, and current other borrowings stood at CNY 1.8 billion. The total debt maturing within one year was CNY 2.7 billion as of 2024, representing 34% of its total interest-bearing debt.

During 2024, the company signed a total of CNY 1 billion ($138.8 million) of onshore bilateral loans with Bank of Communications, Shanghai Pudong Development Bank and other banks management did not name on the call. eHi reduced its average bank loan cost to 3.6% in 2024 from a 4.3% to 4.9% range previously, sources said citing the call.

The company had a total of CNY 7 billion credit lines as of the end of 2024, including CNY 1.6 billion of undrawn credit lines, sources said citing management.

Management said that the company’s other borrowings are associated with its car financing lease, and it can either sell the fleet to make repayments or pledge the fleet to raise more secured loans.

As of the fourth quarter of 2024, the company’s total fleet size was around 125,000, of which 70,000 are operating leases and the remaining are self-owned vehicles, the sources said citing the company.

Management said that the overall cost of operating lease is around 6% annually, which is similar to that of the financing lease.

In order to improve its profitability, the company will expand its revenue base with fleet expansion and higher fleet utilization, and aim to decrease its financing cost by negotiating more favorable terms with greater flexibility, said the management.