Embattled Chinese developer Sunac gets more creditors on board with US$9 billion offshore debt restructuring plan

Name: Growing anger over China’s unfinished ‘rotten tail’ buildings: ‘We really need this home’
Uploaded: 2023-04-21T03:22:41.000Z
Duration: 7 min 21 s
Description: Growing anger over China’s unfinished ‘rotten tail’ buildings: ‘We really need this home’

Debt-laden Sunac said creditors representing 75 per cent of its US$9.1 billion offshore debt have agreed to restructuring terms

The progress indicates ‘creditors’ recognition of Sunac’s capability to continue its operation in the future,’ said a source familiar with the deal

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The progress indicates ‘creditors’ recognition of Sunac’s capability to continue its operation in the future,’ said a source familiar with the deal. Photo: Bloomberg

Elise Makin Beijing

Published: 11:22am, 21 Apr 2023Updated: 12:07pm, 21 Apr 2023

Debt-laden Chinese developer Sunac said creditors representing 75 per cent of its US$9.1 billion offshore debt have agreed to restructuring terms.

The creditors have until May 4 to finalise their support for the restructuring plan, Sunac said in a brief filing to the Hong Kong stock exchange on Thursday evening.

It marks a step forward for the embattled developer, which said on March 28 that it had reached an agreement with offshore creditors representing over 30 per cent of its outstanding debt. A source familiar with the deal said the progress indicates “creditors’ recognition of Sunac’s capability to continue its operation in the future.”

“Investors are concerned about how indebted developers will eventually solve their debt issue. When the restructuring plan is approved and creditors agree to it, it provides an exit for creditors. Everybody should be happy with it,” said Raymond Cheng, managing director and head of China/Hong Kong research and property at CGS-CIMB. “No one wants to see bankruptcy or liquidation.”

Sunac proposed to creditors that they can swap US$1 billion of debt into US$1 billion nine-year convertible bonds. They will have a 12-month window to convert the bonds into shares for HK$20 apiece once the restructuring plan kicks in. Otherwise, the bonds can only be redeemed once they mature.

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Growing anger over China’s unfinished ‘rotten tail’ buildings: ‘We really need this home’

Another proposal is to swap their debt claims into a zero-coupon, five-year bond, subject to a cap of US$1.75 billion.