Nearly all shareholders of debt-ridden Guangdong Investment (GDI) approved the proposed acquisition of a water project from the Guangdong provincial government, marking a big step forward to the completion of China's landmark debt restructuring plan. The proposal was backed by 99.99 per cent of GDI shareholders, according to Wu Jiesi, chairman of GDI and the parent Guangdong Enterprises (Holdings) (GDE). The vote cleared the way for the acquisition of 81 per cent of GH Water Supply (Holdings), which operates and manages the exclusive right to supply natural water from Guangdong province to Hong Kong. Mr Wu said GDI shareholders' approval for the acquisition of the water project would allow both GDI and GDE to proceed with the US$5.59 billion debt restructuring as GDE's restructuring was also a condition to GDI's shareholder approval. GDE and GDI - a 40 per cent owned SAR-listed flagship of GDE - would send master agreements to 120-plus creditors for final approval, Mr Wu said. Creditors would be given 45 days to reply. Mr Wu hopes the debt restructuring will be resolved before the end of the year. David Li Kwok-po, chairman of Bank of East Asia and a GDI director, said more than 90 per cent of creditors would approve as they would end up in a better position under the plan. GDE's proposal would be China's largest debt restructuring exercise. It would also showcase Beijing's efforts to restructure scores of troubled investment companies and financial institutions after the collapse of Guangdong International Trust and Investment Corp (Gitic). GDE's restructuring plan comes after the closure of the provincial government's investment vehicle Gitic in October 1998, which drove investors in other government-linked companies - such as GDE - to panic. The injection of the water utility into GDI is a key element in the Guangdong provincial government's plan to restructure US$5.59 billion in debts owed by its insolvent window company GDE. The Guangdong provincial government plans to inject the water project into GDI to generate sufficient cash flow to enable it to repay GDE and GDI's debt and interest. GDI is involved in properties, hotels and infrastructure investments. The company has net current liabilities of HK$5.2 billion as of the end of last year. As part of the deal, GDI will issue 2.3 billion new shares to GDH Ltd - a Hong Kong incorporated firm wholly owned by the Guangdong provincial government. The provincial government will control 58.69 per cent of GDI, up from 40 per cent.