Bond Update: Road King In‑Principle Restructuring Proposal

On March 16, Road King Infrastructure Limited (“Road King”) announced that it had reached an in-principle restructuring agreement with a significant proportion of its creditors (including the Ad Hoc Group, which together hold close to 25% of the outstanding principal of the bonds). While a formal restructuring proposal has not yet been dispatched to all creditors, this article outlines the framework of their In-Principle Restructuring Proposal.

The proposal consists of two interconnected schemes: the “New Select Scheme” and the “Road King Scheme”.

The “New Select Scheme” covers Road King’s outstanding offshore bonds including five fixed‑tenor bonds and three perpetual bonds (see Table 1).

The “Road King Scheme” will cover the mentioned offshore bonds as well as an USD 110 million syndicated loan facility.

Table 1: Road King's outstanding offshore USD bonds

Type	Bond	Outstanding Amount (USD million)
Fixed-tenor	ROADKG 6.700% 30Mar2028 Corp (USD)	210
	ROADKG 5.900% 05Sep2028 Corp (USD)	160
	ROADKG 6.000% 04Mar2029 Corp (USD)	160
	ROADKG 5.200% 12Jul2029 Corp (USD)	430
	ROADKG 5.125% 26Jan2030 Corp (USD)	440
Perpetual	ROADKG 7.750% Perpetual Corp (USD)	300
	ROADKG 7.000% Perpetual Corp (USD)	300
	ROADKG 7.950% Perpetual Corp (USD)	300
Total		2,300
Sources: Bloomberg Finance L.P., iFAST compilations Data as of 20 March 2025

1. The “New Select Scheme”

Under the Scheme, creditors will receive convertible bonds issued by a special purpose vehicle (“SPV”), which will hold 70% of the equity interest in Road King Expressway International Holdings Limited (“RKE”) upon the effective date of the restructuring. RKE is a subsidiary of Road King, and its asset includes four toll road assets in Indonesia.

Under this arrangement, Road King commits to facilitate the sale of RKE’s equity interests, and the proceeds from such sale will be used to repay the convertible bonds. However, if the equity interests are not fully sold before the maturity date (to be confirmed), all outstanding convertible bonds will automatically convert into 100% of the SPV’s issued share capital. This means creditors will directly become the controlling shareholders of RKE and will have no further recourse to Road King.

In other words, Road King will lose control of RKE after the restructuring becomes effective. The SPV, representing the creditors, will have full discretion over the timing and manner of disposing of RKE’s equity interests, and Road King will no longer hold any veto rights over such decisions.

Prior to the restructuring becoming effective, Road King undertakes not to unilaterally dispose of any equity interests in RKE, safeguarding the creditors’ position.

If the eventual sale value of RKE’s equity exceeds USD 600 million, Road King will be entitled to receive a performance fee linked to the excess portion:

If sold within two years of the effective date: Road King will receive 20% of the excess value.

If sold after two years: Road King will receive 15% of the excess value.

50% of the performance fee will be used as a credit enhancement for the mid-term bonds issued under the “Road King Plan” (Option II).

In addition, the company is currently evaluating whether to offer creditors an optional cash exit alternative, though the terms and structure of this option have not yet been finalized.

2. The “Road King Scheme”:

Under the Road King Scheme, creditors may choose from two options (see Table 2):

Table 2: Summary of Options under the Road King Scheme

	Maximum Acceptance	Consideration	Principal Haircut
Option 1	USD 500 million	10% converted into cash	90%
Option 2	USD 1,905 million	13% converted into 6-year bonds (coupon: 3%)	52.5%
Option 2	USD 1,905 million	34% converted into Road King ordinary shares	52.5%
Source: Company reports, iFAST Compilations Data as of 20 March 2026

Option 1:

Creditors may choose to convert 10% of their debt into cash, implying a 90% principal haircut.

The maximum acceptance amount for this option is USD 500 million.

Option 2:

Creditors will receive a 6-year mid-term bond representing 13% of the principal amount, carrying a coupon rate of 3%.

In addition, creditors will obtain ordinary shares in Road King Infrastructure Limited (stock code: 1098.HK) equivalent to 34% of the principal amount, at a conversion price of HKD 5.6 per share.

Under this arrangement, Road King will issue ordinary shares representing approximately USD 650 million in principal amount. Based on a conversion price of HKD 5.6 per share, this implies the issuance of around 910 million new shares, equivalent to about 121% of the current share count of roughly 750 million shares, meaning existing shareholders may face more than a near‑100% dilution of their holdings.

Although the nominal principal haircut under Option 2 is 52.5%, the equity component would recover only about 3.8% of the original principal, and even assuming full repayment of the new bonds, creditors could still face an effective principal loss of around 83% if the share price remains low.

Post-Restructuring Control of Road King:

The company intends to implement an equity stabilization plan to ensure that the original controlling shareholder retains at least 30% ownership.

Any new shares issued to the controlling shareholder will serve as collateral for the mid-term bonds issued under Option 2.

Creditors participating in the Road King Scheme will collectively hold approximately 44–45% of Road King’s enlarged share capital following the restructuring.

Short Commentary

“New Select Scheme”:

Road King is effectively handing over its core infrastructure asset – a 70% stake in RKE – to creditors as debt settlement, giving creditors control over both the asset and the disposal process, while Road King steps back into a supporting role and can only earn a performance fee if the sale price is high enough.

Assuming RKE is eventually sold for USD 600 million, creditors would receive USD 420 million (70%), which, when allocated across all bondholders (including fixed-term and perpetual notes, see Appendix), would translate into roughly 18% recovery of principal.

On the positive side, creditors are receiving a more tangible asset in the form of a 70% equity stake in RKE; however, from another perspective, Road King effectively transfers the execution risk of monetising the asset to the creditors. Given that Road King has spent the past year seeking buyers without success and sector conditions for infrastructure assets have deteriorated, there is significant uncertainty over the eventual sale price and timing for this 70% stake. If a sale ultimately cannot be completed, creditors may be forced to remain as shareholders, holding the equity rather than recovering their claims in cash.

“Road King Scheme”:

Marked to Road King’s current share price, both options under the Road King Scheme imply low recovery and deep principal haircuts: Option 1 (cash) yields around 10% of principal, while Option 2 (mid‑term bond + equity) yields only about 16.8% of principal on current prices.

At the same time, management has sharply revised down the expected onshore cash flow available for offshore use from RMB 3.0–3.6 billion to RMB 1.8–2.2 billion, highlighting further deterioration in Road King’s operating environment amid a weak domestic property market.

Despite the terms are far from favourable, the company has indicated that a substantial proportion of creditors have already expressed support for this preliminary restructuring framework, and if the final restructuring plan secures 75% or more creditor approval, it will be formally implemented and become legally binding on all creditors.

Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report holds a NIL position in the abovementioned securities.

RISK DISCLOSURE STATEMENTS FOR BONDS

Key risks of investing in bond

Credit risk - bonds are subject to the risk of the issuer defaulting on its obligations. It should also be noted that credit ratings assigned by credit rating agencies do not guarantee the creditworthiness of the issuer; and
Liquidity risk - some bonds may not have active secondary markets and it would be difficult or impossible for investors to sell the bond before its maturity; and
Interest rate risk - bonds are more susceptible to fluctuations in interest rates and generally prices of bonds will fall when interest rates rise; and
Exchange rate risk - If the bond is denominated in a foreign currency, you face an exchange rate risk. Any fall in the foreign currency will reduce the amount you receive when you convert a payment of interest or principal back into your local currency; and
Event risk - A corporate event such as a merger or takeover may lower the credit rating of the bond issuer. In case the corporate restructurings are financed by the issuance of a large amount of new debt-burden, the company's ability to pay off existing bonds will be weakened.

Key risks of investing in high-yield bonds

Higher credit risk - since they are typically rated below investment grade or are unrated and as such are often subject to a higher risk of issuer default; and
Vulnerability to economic cycles - during economic downturns such bonds typically fall more in value than investment grade bonds as (i) investors become more risk averse and (ii) default risk rises.

Bonds with special features

Some bonds may contain special features and risks that warrant special attention. These include bonds:

That are perpetual in nature and interest pay-out depends on the viability of the issuer in the very long term;
That have subordinated ranking and in case of liquidation of the issuer, investors can only get back the principal after other senior creditors are paid;
That are callable and investors face reinvestment risk when the issuer exercises its right to redeem the bond before it matures;
That have variable and/or deferral of interest payment terms and investors would face uncertainty over the amount and time of the interest payments to be received;
That have extendable maturity dates and investors would not have a definite schedule of principal repayment;
That are convertible or exchangeable in nature and investors are subject to both equity and bond investment risk; and/or
That have contingent write down or loss absorption feature and the bond may be written-off fully or partially or converted to common stock on the occurrence of a trigger event.

Remarks

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