Dentons team advises Zike Environment on convertible bonds issuance and debt for equity swap

A Dentons Guangzhou team led by Senior Partner Coco (Zhike) Zhang, assisted by Associates Zhang Xiaowei and Wang Xinyan, recently advised Guangzhou Zike Environmental Protection Technology Co., Ltd. (Zike Environment, stock code: 837770) on the completion of debt for equity swap of its convertible bonds.

On September 22, 2017, the Shanghai Stock Exchange, the National Equities Exchange and Quotation (NEEQ), and China Securities Depository and Clearing jointly promulgated the "Rules for Private Placement of Convertible Bonds by Innovative Companies and Start-ups (for Trial Implementation)" (the Rules). By encouraging innovative companies and start-ups to issue convertible bonds, the Rules aim to allow the capital markets to better serve the national innovation-driven strategy and supply-side structural reforms, and to enrich the variety of bonds, as well as choices of investment and divestment. Following the implementation of the Rules, Ms. Zhang's team assisted Zike Environment in issuing its series I convertible bonds in 2018.

In this engagement, the team advised Zike Environment on swapping the above-mentioned convertible bonds into equities, setting a precedent for such swaps in China. It will provide guidance for similar future matters, and further validate the initial intention of introducing convertible bonds. 

During the process, Ms. Zhang's team collaborated with the sponsoring brokers, and provided a full scope of quality legal services for the smooth implementation of the swap. The new shares of Zike Environment created by this swap were listed on the NEEQ on May 9, 2019 and are available for public transfer.