OREANDA-NEWS. Fitch Ratings says today that the ratings on Modern Land (China) Co. Limited (Modern Land; B/Positive) and its US dollar notes due 2018 and 2019 and offshore yuan denominated notes due 2017 will not be impacted even if the proposed amendments in a consent solicitation announced on 8 June 2015 are adopted.

The purpose of the consent solicitation is to allow the company to pursue business opportunities, given the development of the company's businesses and the market, which may otherwise be constrained by the current terms of the bonds. This change will also make the indenture of the US dollar bonds and offshore yuan bonds conform to the terms of the senior notes issued by other Chinese homebuilders.

Major proposed amendments of the indenture include: lowering the minimum fixed-charge coverage ratio that the company must maintain to 2.75x from 3.0x; amending the definition of consolidated EBITDA to include fair value changes of investment property and realised gain on interest disposal; and raising the cap of permitted investment in associates to 20% of total assets. The company is also proposing to create a new "permitted indebtedness" category, which together with "purchase money indebtedness" will be limited to 30% of total assets and used to finance the acquisition and development of property.

The proposed amendments will loosen the existing indentures on the bonds due 2017, 2018 and 2019, but the changes facilitate Modern Land's business operation and are not material. If the proposed indenture changes are adopted, Fitch expects Modern Land to have greater investment and financial flexibility to rearrange its business strategy or corporate structure.