Sino-Env defaults on $149m bonds

Sino-Environment Technology Group yesterday disclosed that it has defaulted on convertible bonds (CBs) worth $149 million after certain conditions under the bond agreement were not met. The news sent its stock spiralling downwards after its morning trading halt was lifted. It dived as much as 28.6 per cent to 7.5 cents before ending the day 14.3 per cent or 1.5 cents down at nine cents. The company was unable to meet a condition that requires it to pay interest on the bonds semi-annually in arrears on Jan 8 and July 8 of each year. This constituted an event of default on the bonds. Sino-Environment was also unable to confirm whether it could comply with two other conditions. One condition requires the group to ensure that at the end of each calendar quarter on and after June 30, 2008, the ratio of consolidated total debt to consolidated Ebitda (earnings before interest, tax, depreciation and amortisation) for the past 12 months is less than five. This is a common metric used by credit rating agencies to assess the probability of defaulting on issued debt. The other condition requires the group to publish in its quarterly earnings results as well as file with the trustee Bank of New York Mellon a statement affirming its compliance with the said. The group said that its inability to confirm compliance with the two conditions was due to a delay in the commencement of a review of certain significant cash transactions.

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