Chinese developer Sunac reaches deal with key creditors on offshore debt revamp plan

Sunac China Holdings has reached an agreement with key creditors to restructure US$9.6 billion in offshore debt, marking another step forward for the country’s beleaguered home builders as the property market begins to show signs of stabilisation.

The Beijing-based developer entered into a restructuring support agreement with creditors holding around US$1.3 billion in principal, while another group of creditors with over US$1 billion in debt has also expressed support and was in the process of signing off on the deal, Sunac said in a filing to the Hong Kong stock exchange late on Thursday.

The two groups of creditors held about 26 per cent of Sunac’s existing debt, it added.

Under the agreement, creditors can choose to receive two types of mandatory convertible bonds (MCBs). MCB 1 will be converted into ordinary shares at HK$6.8 (US$0.9) per share when the restructuring takes effect, and MCB 2 will be converted 18 months later at HK$3.85 per share. Creditors could also opt for a combination of the two bonds, with the proportion of MCB 2 capped at 25 per cent.

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Sunac said that about 23 per cent of the new MCBs would be issued to founder and chairman Sun Hongbin – a substantial shareholder – in the form of restricted shares. These shares are intended to help stabilise the company’s shareholding structure and cannot be sold for six years.