China developer Yuzhou offers debt restructuring plan

Yuzhou group Co

07/08/2023 05:41

HONG KONG, Aug 7 (Reuters) - Chinese property developer
Yuzhou Group  1628.HK  rolled out a plan to restructure its debt
after defaulting on dollar bond payments last year, sparking a
short rally in its shares and bonds on Monday.   
    The debt proposal by the Shenzhen-headquartered company,
with $6.8 billion in offshore liabilities, is one of a handful
announced so far by developers hit by the property sector's debt
crisis.
        Offshore bondholders were given three options to convert
their existing debt into new notes, with the shortest tenor
notes having a 70% haircut.
    In a stock exchange filing on Sunday evening, Yuzhou said
holders of its senior notes and senior perceptual bonds can
choose between new notes with a short-term maturity, new notes
with medium-term maturities together with new shares of the
company, and new notes with long-term maturity.
    For short-term notes that have a three-year tenor and carry
6% coupon, every $10 of principal would be converted into $3 of
new note for senior note holders.
    The 4%-5.5% four- to seven-years medium-term notes would
have a conversion of $10 of principal to $7 of new notes and $3
of new shares, while 10-year long-term notes have a one-to-one
conversion rate but carry zero coupon.
    There are also some credit enhancement packages offered to
the short-term and medium-term notes.
    Bondholders would receive a 0.2% of early bird consent fee
and 0.1% consent fee if they support the restructuring proposal.
    Yuzhou's January 2023 dollar bonds traded at 4.878 cents on
the dollar on Monday, compared with 4.295 cents on Friday. Its
5.375% perpetual bond traded at 3.327 cents. The company's
shares soared as much as 11.8% on news of the preliminary debt
proposal before declining 2.6% by noon. The shares have lost
two-thirds of its value since December. 
    Yuzhou added the total cash available to service offshore
debts is estimated to be between $3.8 billion to $4.6 billion,
of which 15-19% are available before 2026.    
    Alvarez & Marsal, BOCI Asia and Haitong International are
Yuzhou's financial advisers, and Linklaters is its legal
adviser.
    PJT Partners and Kirkland & Ellis are advisers of the ad hoc
group, which represents holders of 29% of outstanding senior
note principals.  

 (Reporting by Clare Jim; Editing by Jacqueline Wong)
 ((clare.jim@thomsonreuters.com;))