Last week,  Standard & Poor&rsquo s  cut its ratings on China Fishery and Copeinca by one level to B, or five steps below investment grade, and put them on negative watch because of the risk debt can&rsquo t be refinanced. Moody&rsquo s Investors Service said last month it will review its B2 rating if the consent process fails.

Anchovy Quota

China Fishery officials didn&rsquo t immediately return e-mails and calls made outside of working hours for the Singapore-listed group. Calls to Copeinca&rsquo s main number weren&rsquo t answered.

China Fishery spent more than $782 million taking over Copeinca last year, giving it control of the biggest anchovy quota-holder in  Peru  and the world&rsquo s third-largest fishmeal producer. The purchase was partly funded by loans that lenders now say must be guaranteed by Copeinca, according to S& P.

With some $2.5 billion of assets at the end of March, Copeinca accounted for at least 90 percent of the group&rsquo s total assets and earnings, company filings show.

&ldquo That&rsquo s a lot of additional debt for Copeinca bondholders to share with other group creditors,&rdquo Charles Macgregor, the Singapore-based head of  Asia  at Lucror Analytics Pte, an independent credit-research company, said before the extension was announced. &ldquo This is a credit that continues to surprise on the downside.&rdquo

Bonds Fall

Copeinca bondholders are being offered $10 for every $1,000 in face value of bonds held, or 1 cent on the dollar, as an incentive to consent to the covenant changes. If the minimum number, or 50.1 percent, of bondholders agree, that will cost the company $1.25 million.

The yield on China Fishery&rsquo s 9.75 percent 2019 notes has risen 7 basis points this week to 10.576 percent as of yesterday, Bloomberg-compiled prices show.

The yield on Copeinca&rsquo s 2017 bonds rose 19 basis points to 11.1 percent today at 2:52 p.m. inNew York, reaching the highest in five months.

Worst-Case

China Fishery signed a four-year credit facility for $650 million in March with China CITIC Bank International Ltd., Rabobank International, DBS Bank Ltd., Standard Chartered Plc and HSBC Holdings Plc, according to the March 24 statement.

Proceeds were to be used to redeem Copeinca&rsquo s 2017 notes, acquire the rest of the shares in Copeinca it didn&rsquo t already own, repay some debt and for general corporate purposes. The bond buyback plan was scrapped in May, according to a May 23 notice to bondholders obtained byBloomberg News.

&ldquo The worst-case scenario, if they can&rsquo t get the consent from Copeinca bondholders, is a technical default on the loans, and the banks will probably give them a temporary waiver,&rdquo Annisa Lee, a credit analyst in  Hong Kong  at Nomura Holdings Inc., said by phone on Aug. 20. &ldquo The other alternative is for them to call the Copeinca bonds.&rdquo