HONG KONG (Reuters) -A Hong Kong court on Thursday approved Sunac China’s $9 billion offshore restructuring proposal, the property developer said in an exchange filing.
The court’s decision marked the final approval the company needs to carry out its debt revamp plan, the first for a major Chinese property developer that is expected to be a template for cash-strapped peers in a key sector battered since mid-2021.
“As at the date of this announcement, all the scheme conditions have been fulfilled and the scheme effective date has occurred on 5 October 2023,” Beijing-based Sunac said in the filing.
Sunac’s shares closed up 6.3% on Thursday, versus a 0.2% rise in the Hang Seng Mainland Properties index.
Creditors of Sunac approved its $9 billion offshore debt restructuring plan last month, under which a part of its debt would be exchanged into convertible bonds backed by its Hong Kong-listed shares along with new notes with maturities of between two and nine years.
Unlike Sunac, many fellow developers have yet to reach agreements with offshore creditors.
Property developers have been struggling under a mountain of debt since mid-2021, following a government clampdown on speculation. Companies accounting for 40% of Chinese home sales – mostly private property developers – have defaulted.
Beijing has rolled out a range of support measures to try to revive the sector, which makes up about a quarter of the world’s second largest economy, but analysts say more steps are needed.
China Evergrande Group, in the centre of the sector’s debt crisis, last month cancelled the creditor votes for its $31.7 billion offshore debt restructuring plan, saying it would have to reassess the terms of the proposed restructuring as home sales were not meeting expectations.
Last week, its said its main unit in China was unable to issue new debt due to an ongoing investigation, complicating the restructuring plan.
(Reporting by Clare Jim and Sameer Manekar; Editing by Sonali Paul, Arun Koyyur and Shounak Dasgupta)