Creditors of Guangdong Investment (GDI) have to give a written response to the company's debt-rescheduling proposals by July 25, according to sources. GDI made the announcement at a meeting with creditors in Hong Kong to explain the debt-restructuring proposal made by the company. Sources close to the company who attended the meeting said they were 'quietly hopeful' the proposal would be accepted. 'We think it passes the make-sense test,' one source said of the debt-restructuring plan. The company hopes an agreement with all the creditors can then be signed on August 8 and debt rescheduling completed within a few weeks. 'Basically the idea is to get about 45 per cent of the debt repaid over the next five years,' one source said. The GDI debt proposal depends on the successful injection of the Dongshen Water Supply Project, which is aimed at bolstering the company's cash flow. Creditors of Guangdong Enterprises (Holdings) (GDE) - which holds a 40.54 per cent stake in GDI - need to approve the broader debt workout proposal for GDI's plan to proceed. GDE creditors are expected to hold a similar meeting within one to two weeks. GDE, one of the largest businesses of the Guangdong provincial government, ran up US$5.59 billion of debt in the 1990s. The group then suffered from a credit crunch after the People's Bank of China ordered the closure of the provincial government's investment vehicle, Guangdong International Trust and Investment Corp, in October 1998 amid much uncertainty about whether creditors would be repaid. Investors in other government-related companies - especially GDE - panicked, which precipitated the government's appointment of Goldman Sachs to advise on a debt-restructuring proposal of which locally listed GDI's workout plan is an important part. GDE's restructuring is viewed as a litmus test of Beijing's credibility in safeguarding the interests of creditors of companies with heavy debt loads.