Changda Intl (OTC BB:CIHD)

As previously reported, on February 3, 2010, Changda International Holdings, Inc. issued promissory notes in the aggregate principal amount of $900,000 to certain accredited investors. The February 2010 Notes bear interest at 20% and matured on August 3, 2010. On August 3, 2010, holders of an original aggregate of $200,000 of February 2010 Notes (the “200K Holders”) entered into an agreement with the Company pursuant to which the Maturity Date of the February 2010 Notes held by the 200K Holders was extended until December 1, 2010 (the “December 2010 Maturity Date”). On December 7, 2010, the 200K holders entered into a subsequent agreement with the Company pursuant to which the December 2010 Maturity Date of the February 2010 Notes held by such persons has been further extended until January 21, 2011.

On January 21, 2011, the holder of an original aggregate of $150,000 of February 2010 Notes entered into an agreement with the Company pursuant to which the January 2011 Maturity Date of the February 2010 Notes held by such person has been further extended until March 31, 2011 (the “New Maturity Date”), provided, however, the Holder shall have right to convert its principal amount of February 2010 Notes then outstanding, plus accrued but unpaid interest thereon (which is currently equal to a rate of 25% per annum) (the “Owed Amount”), at its sole option, into such number of shares of the Company’s common stock which is equal to the Owed Amount divided by 0.75. No fractional shares of the Company’s common stock will be issued upon such conversion and all fractional shares shall be rounded up to the nearest whole share.

Important note:

They claim that loan default was not due to a lack of liquidity:

"the State Administration of Foreign Exchange (SAFE), which must approve certain registration and amendment procedures necessary for capital inflow from an offshore entity, such as inbound investments or shareholders loans, or capital outflow to an offshore entity, such as the payment of profits or dividends, liquidation distribution, equity sales proceeds, or return of funds upon a capital reduction, did not grant the PRC subsidiaries approval to remit funds out of the PRC."

On October 1, 2010, the Company received notice that on September 27, 2010, holders of an aggregate of $250,000 principal amount of February 2010 Notes filed a complaint (the "Complaint in the Supreme Court of the State of New York, County of New York  against the Company seeking repayment of their respective February 2010 Notes.

On December 7, 2010, the 200K holders entered into a subsequent agreement with the Company pursuant to which the December 2010 Maturity Date of the February 2010 Notes held by such persons has been further extended until January 21, 2011, provided, however, that if the Company does not repay all amounts due and payable under the February 2010 Notes on or before December 21, 2010, then beginning on December 21, 2010 and ending on the New Maturity Date, the Holder shall have right to convert their respective principal amount of February 2010 Notes then outstanding, plus accrued but unpaid interest thereon (which is currently equal to a rate of 25% per annum), at their sole option, into such number of shares of the Company’s common stock which is equal to the Owed Amount divided by 0.75.  No fractional shares of the Company’s common stock will be issued upon such conversion and all fractional shares shall be rounded up to the nearest whole share.

As of December 6, 2010, the Company has made payments to the holders of the February 2010 Notes totaling an aggregate of $500,000.  This Partial Payment covered all accrued but unpaid interest due and payable under the February 2010 Notes through December 6, 2010 with the remainder as a partial payment of the principal amount due and payable under the February 2010 Notes.  Accordingly, as of December 6, 2010, the principal amount remaining under the February 2010 Notes was $567,252.12.


The Company is currently continuing to work on making further arrangements to honor the remaining obligations under the February 2010 Notes, either from its PRC operating subsidiaries or otherwise, however, there can be no assurance that any such arrangements will ever materialize or be permissible or sufficient to cover any or all of the obligations under the February 2010 Notes.

GeoTeam® Note: As of the most recent 10Q, CIHD had a $9.8 million cash balance which appears ample enough to satisfy this obligation. We believe that CIHD could see its shares approach its book value per share of $1.65 if the company resolves this issue and if SEC filings are an accurate portrayal of the company's financial health.  We will closely monitor this matter.
 

On February 3, 2010, Changda International Holdings, Inc. issued promissory notes in the aggregate principal amount of $900,000 to certain accredited investors (the “February 2010 Notes”).  The notes bear interest at 20% and matured on August 3, 2010.  As of the date hereof, the Company has not repaid any principal or accrued but unpaid interest that has become due and payable under the February 2010 Notes.

On August 3, 2010, holders of an aggregate of $200,000 of February 2010 Notes entered into an agreement with the Company pursuant to which the Maturity Date of the February 2010 Notes held by such persons have been extended until the earlier of (i) December 1, 2010 or (ii) 5 business days after the closing of the Company’s public offering of its equity and/or debt securities (the “New Maturity Date”).  In consideration for the extension of the Maturity Date to the New Maturity Date, the Company agreed to provide these holders of February 2010 Notes with the following consideration: