Sources said the Hong Kong High Court on Thursday endorsed a proposal allowing the indebted developer, once the country’s largest homebuilder by sales, to extend repayment of US$17.7 billion in offshore debt. The creditors now have the option to swap their debt for shares, receive convertible bonds or accept new notes.
The company also disclosed that onshore bondholders had agreed to extend nine bonds worth 13.8 billion yuan (US$1.95 billion) on Wednesday. Domestic creditors were given the option to either sell the bonds back to the company at a discount, convert debt into equity or retain their claims as general creditors.
The two restructuring plans were expected to reduce Country Garden’s total debt by more than 90 billion yuan and significantly ease repayment pressure over the next five years, according to the company. It added that financing costs for most new debt instruments were expected to drop sharply – to between 1 per cent and 2.5 per cent.
The approval of the plans marked a new phase for the company, according to Liu Shui, director of corporate research at China Index Academy, a real estate research firm. “This could help to rapidly restore normal business operations,” Liu added.
