Global Liability Management Quarterly: Is It the Omni-Blocker’s Time to Shine, and How Should Lenders Price the Coverage It Provides?; Selecta Transaction One of Europe’s Most Aggressive, While Risks of LME Remain at Victoria; Country Garden Gives Lenders Various Options in Restructuring

In our second-quarter 2025 global quarterly report highlighting our work on liability management exercises, or LMEs, used by stressed creditors to partially refinance capital structures, Octus discusses whether conditions are now ripe for omni-blocker language and how market participants should value such protection. We also review LMEs in Europe and the terms of Country Garden’s recently proposed restructuring.

This report summarizes the latest trends in liability management, including “aggressive” transactions completed or contemplated by U.S., European and Asian borrowers during the second quarter that, among other things, raise cash, extend maturities or reduce outstanding principal, and sometimes all three.

The report concludes with a table summarizing select aggressive U.S. LME transactions covered by Octus during the quarter, which are also now available on Credit Cloud HERE. To date, aggressive LMEs involving, for example, uptiering and drop-downs have been more common in the U.S. market and relatively limited in the European market despite a few such high-profile transactions appearing in 2024 and the recent Selecta recapitalization, although that may be changing, albeit slowly. Meanwhile, in China/Asia, the real estate sector has been a hotbed of LME activity as the industry continues to struggle.

In our special RX101 European LME series, we explore the evolving landscape for LMEs across Europe. With insights sourced directly from leading local counsel, the series breaks down the legal tools, restructuring tactics and cultural norms shaping how debtors approach LMEs in seven key jurisdictions: Italy, France, Germany, Spain, the Netherlands, Luxembourg and England.

Octus’ RX 101 on LMEs and “creditor-on-creditor violence” is HERE. Octus’ LME 101 covering double-dip transactions is HERE, and our RX 101 on basic themes of directors’ duties across key European jurisdictions is HERE. Octus’ RX 101 on LMEs in Europe is HERE.

We will be hosting roundtable discussions with Weil on LMEs and Private Credit on Wednesday, July 16, and with Cadwalader on Anti-Cooperation / Anti-Boycott Covenants on July 23.

• WBD’s anti-boycott provision: On June 16, Warner Bros Discovery, or WBD, announced that it had received the requisite consent to adopt a series of proposed amendments in connection with its recent tender offer and consent solicitation, which introduced a variant of controversial anti-cooperation language into its existing bonds. The WBD transaction marks the first time such language has cleared any market. Whether this is an isolated case or the start of a broader market shift remains to be seen.
• Omni-blockers: Omni-blockers, or anti-LME covenants, are intended to decisively preclude liability management plays of all stripes, especially non-pro-rata priming deals. Borrowers that are keen to preserve refinancing flexibility have resisted omni-blockers outside of post-restructuring or post-LME situations. Still, lenders may be able to secure their adoption for the right price. Our modeling suggests that first lien lenders should be willing to pay about 60 bps per year on a five-year term loan for an omni-blocker, reflecting the sub-1% annual loss risk from non-pro-rata uptier or drop-down LMEs that we calculate. This estimate is based on losses sustained by excluded lenders in uptier and drop-down deals, plus other data from our Credit Cloud, available HERE.
• Selecta: The “creditor-on-creditor violence” imposed in this series of transactions is masked by an in-court restructuring designed to limit litigation risk, leading to a pro rata haircut for first lien lenders and a full write-off for second lien lenders. New second-out notes are open for all second lien bondholders to participate, with voting equity allocated pro rata to new-money providers. An exchange offer will follow, allowing holders of reinstated third-out notes – allocated to original first lien creditors – to swap into senior secured first-out notes. The first-out notes include an industry-first 50% consent threshold to amend sacred rights / economic terms, effectively forcing non-ad-hoc-group first lien creditors into the haircut and subordination option while enabling restoration of par value for the ad hoc group creditors. Post-transaction, the ad hoc group’s control over the company and majority holdings in the new Opco debt position them to steer any future restructuring, which is particularly important, as post-restructuring leverage still remains high.
• Victoria: Although the company’s near-term funding gap has been resolved through a £130 million third-party super senior facility provided by Arini, concerns over a potential uptier, such as in Hunkemöller, remain. Prices for the 2028 senior secured notes remain under pressure amid lingering concerns over Redwood’s previously rejected proposal to uptier and extend the 2026 senior secured notes by two years.
• Lessons from Altice France: Altice France’s restructuring, now agreed to by a significant majority of its creditors and winding its way through the French legal system, was negotiated with LME risk as the backdrop and provides some invaluable lessons for investors. In a nutshell, documentary terms matter a lot, temporal seniority could prove to be a significant advantage, and cooperation agreements have come to be a critical defensive weapon. Further, we surmised that the risk of LMEs with respect to European companies may be elevated for New York law governed bonds compared with English law governed situations in certain situations but not in others.
• Country Garden Holdings: China’s property sector distress continues as Country Garden advances a complex restructuring that divides banks and noteholders. The company obtained support from more than 70% of public noteholders for its RSA, addressing $14.074 billion in offshore debt through a two-class scheme. The plan presents five options mixing cash, mandatory convertible bonds and new notes. Progress is stalling as bank lenders demand resolution on sharing their security package, pushing the Hong Kong winding-up hearing to Aug. 11.

A Bridge Too Far? What Warner Brothers Discovery’s Anti-Boycott Covenant Could Mean for Credit Markets

On June 16, Warner Bros Discovery, or WBD, announced that it had received the requisite consents to adopt a series of proposed amendments in connection with its recent tender offer and consent solicitation, which would introduce controversial anti-boycott provisions into its existing bonds.

The anti-boycott language caused a stir in U.S. credit markets, showcasing an unexpected and high-profile bid by a borrower to curb group coordination among creditors. Recent attempts to include similar provisions in broadly syndicated loans have been fiercely resisted by lenders.

The WBD transaction marks the first time a variant of anti-cooperation language has cleared any market. Although the development is a directional win for issuers, its reach may be limited by the scope of the language and the specific circumstances of the WBD transaction.

First, WBD’s anti-boycott language is narrower than the broad anti-cooperation clauses recently floated in the BSL market: It bars holders only from entering boycott agreements that prevent them from supplying the company with new-money financing but does not bar “customary” cooperation agreements for “self defense” with respect to existing debt.

Second, the precedent set by WBD’s anti-boycott covenant must be understood in light of the broader deal structure, particularly the $17.5 billion bridge facility that funds the offers. Although broad anti-cooperation provisions can appear to be a naked attempt to disarm creditors before an LME, WBD can argue that this targeted clause merely stops holdouts from derailing syndication of the bridge and the permanent financing that will replace it. The affected WBD bonds also carry investment-grade covenant packages that, by design, give creditors only limited negative covenants and protections.

In our view, the debut of anti-cooperation language in these circumstances is unlikely to shift creditor sentiment or overcome resistance to the language in the high-yield or broadly syndicated loan markets, where covenants are subject to more scrutiny and negotiation than their investment-grade counterparts. Even so, the WBD deal does suggest that investment-grade investors may be willing to tolerate terms that are unthinkable elsewhere, signaling a risk that the language could spread within that asset class.

Is It the Omni-Blocker’s Time to Shine?

Liability management exercises, or LMEs, have proven themselves to be the gift that keeps on giving. The Serta and Mitel decisions lit up New Year’s Eve for lenders, borrowers and advisors. Given that the “open market purchase” language at issue in Serta was the prevalent pro rata sharing purchase exception in credit agreements, many believed that the Fifth Circuit’s decision ended non-pro-rata LMEs.

That optimism proved short-lived. According to Octus’ research, the language in Mitel blessed by the New York state appellate court as encompassing a non-pro-rata exchange – that a borrower “may purchase by way of assignment and become an Assignee with respect to Term Loans at any time … a ‘Permitted Loan Purchase’” is present in a minority, but not insubstantial number, of credit agreements. Minority lenders’ appeal of the Mitel ruling has been settled through the company’s chapter 11 plan, meaning that the Mitel decision is the last word from a New York state appellate court concerning a non-pro-rata exchange for the foreseeable future.

Even before the Fifth Circuit’s Serta decision, borrowers and majority lenders had amended credit agreements to permit “privately negotiated” or similar transactions, which likely fall outside the Fifth Circuit’s parameters. Better Health then pioneered a novel use of typical amend-and-extend provisions to effectuate a non-pro-rata exchange less than a month after the Serta decision. Oregon Tool followed soon after with its own non-pro-rata exchange, which it also effectuated through amend-and-extend provisions. Serta has proven to be a small speed bump rather than a sinkhole.

While the road ahead is not without potholes for borrowers, sponsors and majority lenders looking to carry out a non-pro-rata exchange, litigation is time consuming. Future court decisions may – like Serta – prove to be another hoop through which sophisticated advisors can easily jump. And patchwork blockers have given rise to a game of LME whack-a-mole: A new LME arrives on the scene, new contractual protections emerge ex post facto, then yet another LME circumvents those protections.

We at Octus have heard from lenders who wish to deal decisively with non-pro-rata LME risk. To date, omni-blockers have not been widely adopted by the market and have been largely limited to post-restructuring / post-LME contexts. Though we have seen omni-blockers included in a small number of public deals, including Spirit Airlines, CommScope and Sinclair, we expect that borrower resistance outside of these contexts will remain. That said, tariff-driven volatility and uncertainty may put some borrowers on the back foot, potentially putting lenders in a better position to negotiate for these heightened protections.

As with any blocker, lenders must parse the precise wording of an omni-blocker to determine its level of protectiveness: in fact, if not drafted carefully, the blocker may increase rather than mitigate litigation risk. Lenders should also be cognizant that a heavily negotiated omni-blocker on its own may not address all LME risks. For example, the Spirit Airlines omni-blocker omitted certain protections that lessened its effectiveness. If omni-blockers become more prevalent, we expect that they will appear in addition to (and not as a replacement for) the existing patchwork of named LME blockers. Overall, however, we continue to believe that a properly drafted omni-blocker is a credit-positive development.

A further discussion of omni-blockers, including an illustration of a hypothetical omni-blocker can be found HERE.

How Much For That Omni-Blocker in the Window?: Pricing the Omni-Blocker

In a market driven by supply and demand, everything has a price. The recent rise of the omni-blocker has cheered creditors that are concerned about losing value to other creditors in a non-pro-rata liability management exercise. However, this protection remains rare in the primary market, as it surfaces mostly in post-LME or post-bankruptcy paper. This is partly because demand for new loans seems to be outstripping supply, but another reason may be an inability of market participants to price this protection.

We estimate that first lien lenders should be willing to pay about 60 basis points per year for protection from non-pro-rata uptier and drop-down LME transactions on a five-year first-lien term loan. Said differently, we believe lenders for a portfolio of newly issued five-year loans to high-yield borrowers have a risk-of-loss from non-pro-rata LMEs of under 1% per year.

This estimate is based upon our recent work analyzing the amount of value lost by non-ad-hoc-group lenders in uptier and drop-down transactions as well as various other estimates from the data in our Credit Cloud HERE. Octus subscribers can download our omni-blocker insurance calculator to flex the various assumptions HERE. We do not account for potential of loss from double-dip transactions in our analysis because of a lack of historical data on how these transactions will fare in a bankruptcy, while two of the earliest pari-plus transactions (Rayonier and Sabre) have been successfully refinanced with regular-way debt.

In this exercise, we seek only to price the risk of lenders being on the wrong side of a non-pro-rata LME transaction, as we believe they are compensated for the risks of a pro rata financial restructuring through the spread at which they are lending. We would also caution that the above takes a portfolio-level view of the risk, while individual credits might suffer specific idiosyncratic risks associated with, for example, specific sponsors who may be more apt to entertain an aggressive transaction.

Some may ask why they should pay a 60-basis-point premium for an omni-blocker as opposed to potentially paying less for a tighter version of typical pro rata sharing protection. In our view, typical pro rata sharing protections are forever at risk of being exploited by clever lawyers. Investors should look no further than the series of events following the Fifth Circuit’s December 2024 decision in Serta. By closing off the “open market purchase” path to a non-pro-rata deal, the Fifth Circuit decision ostensibly effected a marketwide tightening of pro rata sharing protections in broadly syndicated loan documents. Yet a workaround – extend and exchange – was achieved only weeks later by Better Health and replicated shortly thereafter by Oregon Tool. With that in mind, we believe investors should focus on a protection that is more likely to hold up: an omni-blocker that expressly protects lenders’ pro rata sharing rights in the context of a liability management exercise.

With the following exercise, we aim to bridge the gap, providing investors with a rubric to use in valuing the risks associated with non-pro-rata LMEs. To be clear, we are explicitly not looking to price the risk of a default that leads to a bankruptcy or a pro rata LME, as we believe those should be compensated for by the interest rate spread on the associated debt. Instead, we are looking to price the risk associated with a creditor being treated differently from like-situated creditors – the non-pro-rata LME.

To begin to rectify this situation, we have leveraged our liability management data set in Credit Cloud to derive the portfolio-level risk of a non-pro-rata LME, incorporating both the risk of a transaction and estimating the amount of value lost. Credit Cloud, launched in 2022, enables complex research, screening and analysis across multiple leverage finance and restructuring data sets.

Below are the assumptions we used in our modeling.

More details on our assumptions can be found HERE.

Selecta, an Aggressive LME Masked by a Pro Rata In-Court Restructuring Transaction and Subsequent Exchange Offer

In June, Selecta undertook a sweeping and aggressive recapitalization, transferring control and future upside to a tightly coordinated ad hoc group of creditors (the “AHG”) while potentially subordinating non-participating holders through coercive mechanics. Prior to the transaction, Selecta’s capital structure consisted of €760 million 8% cash-pay first lien notes and €341 million 10% PIK second lien notes.

Following the transactions, this legacy debt was replaced by a new four-tier structure, anchored by €330 million of new money, split across a €100 million super senior secured bond, a €70 million super senior secured revolving credit facility and €160 million of senior secured second-out (“2O”) notes, all maturing in 2030.

The overall transaction was structured in two steps. The first step, the so-called recapitalization, leads to a restructuring that provides pro rata treatment across creditor classes and minimizes litigation risks at the in-court restructuring stage. See the detailed transaction chart below:

Through a controlled enforcement sale to a new holding structure that has been approved by the Dutch court, it will fully discharge the existing capital structure and transfer the company ownership to the existing bondholders. As part of the in-court restructuring, legacy first lien creditors were automatically allocated a new class of senior secured third-out (“3O”) 10% PIK toggle notes at 85 cents on the euro, along with 15% of the reorganized equity on a nonvoting basis.

The second step features a tailored exchange offer, under which non-AHG first lien bondholders need to make a choice between remaining in the senior secured 3O tranche or swapping into the new senior secured first-out, or 1O, notes, which restores par value but requires relinquishing equity and accepting much looser covenants that favor the AHG.

While the par recovery in new 1O notes appears optically superior – especially given the minimal post-RX day-one equity value – the structure exposes non-AHG creditors to significant downside risk. The 1O notes document allows the sacred rights / economic terms to be amended with only 50% consent, apparently industry first, during a 12-month window, including changes to key terms such as priority status, payment terms and subordination. Given that the AHG was able to amass control of the majority of the 1O notes through a separate private exchange offer that was open exclusively to the AHG bondholders, it is now in a position to unilaterally push through amendments that could strip all the value from non-AHG creditors in any possible coming restructuring.

The result is a coercive dynamic, whereby non-AHG first lien holders may feel effectively compelled to accept the haircut and subordination that comes with the 3O notes, as it offers stronger covenant protection (90% consent threshold to amend sacred rights or economic terms) amid the fear of future LMEs, particularly given that the post-restructuring leverage remains high at 6.8x. Meanwhile, AHG first lien creditors will have majority holdings of the new 1O notes, exceeding the 50% consent thresholds, which allows it to change all key terms of the notes, including principal, maturity, interest and security. This would give the AHG unilateral control to strip value off the non-AHG creditors in potential LMEs.

Post-transaction, the AHG second lien creditors will hold a majority position in the new 2O notes – at least €133 million plus accrued interest out of the €160 million in new 2O notes, before accounting for fees paid in kind – comprising €50 million of interim financing rolled into the 2O notes on a cashless basis and at least 83% of the pro rata €100 million cash 2O offering, reflecting their holding of the existing second lien notes.

From an equity perspective, the AHG second lien creditors will have voting control of the company through their majority ownership of the Class A1 voting shares, along with a 20% equity stake in the form of Class A2 voting shares as backstop compensation for the AHG new-money providers.

The AHG creditors’ dominant position across the 1O, 2O new notes and equity effectively positions them to retain control in the event of any potential future restructuring, should the turnaround plan – driven by special situations funds within the group – fail to deliver.

In the European market, the transaction exemplifies an unusual degree of aggressive creditor-on-creditor violence. Selecta’s recapitalization inserts additional super senior capital at the top of the structure, gives non-AHG first lien creditors the option to be subordinated with equity, or in the 1O with risk of rights stripping at a later date, and consolidates control of the company’s capital stack and equity with a small, coordinated group. Although technically consensual, the restructuring illustrates how minority creditors can be forced into structurally junior positions if they refuse to roll into new instruments dominated by a controlling class. The combination of reduced consent thresholds, tightly held voting control and structurally subordinated fallback options means that Selecta’s deal may set a new benchmark for European liability management exercises driven by aligned creditor groups, if indeed it is not successfully challenged by non-AHG creditors.

Victoria Fills Liquidity Gap with Third-Party Super Senior Funding, but Uptiering Risk Continues to Weigh on Investor Sentiment

Speculation has been rife regarding a potential Hunkemoeller-type transaction on U.K.-based flooring manufacturer Victoria Plc, as the maturity of the group’s €500 million senior secured notes due 2026 edges closer. Redwood Capital, which led an uptiering transaction that resulted in some of the Dutch lingerie retailer’s bondholders getting primed, is rumored to hold roughly a third of Victoria’s £750 million of senior secured notes outstanding, across the 2026s and £250 million of SSNs due 2028.

In December 2024, a proposal to extend and uptier the 2026s was proposed to bondholders by Victoria. This was rejected at the time, as it was opposed by cross-holders who were concerned about the subordination of the 2028s. As part of the proposal, Victoria’s preferred equityholder, Koch Equity Development, would not be providing new funding, despite the need to replace the group’s £150 million revolving credit facility, which was about to go current just two months later, in February 2025.

The aim of the extension in the original proposal was to provide Victoria with more runway to turn around performance, which is currently depressed because of “bottom of the cycle” demand for its carpets and tiles. At the time of the December proposal, the 2028s were quoted in the low 70s. Significant blocks of the RCF then traded, as banks sought to de-risk balance sheets, despite rumors that the company was considering a third-party funding solution.

Victoria has now found a solution to its funding need, having secured a £130 million super senior facility in late June, consisting of a term loan and an RCF, which replaced the £150 million RCF due in February 2026. Arini was the sole capital provider. It is unclear whether Arini is also a noteholder, however this appears to be a true third-party solution, as it was provided by the group’s private credit stressed funding arm.

However, even though the funding need has been addressed, the upcoming £500 million maturity of the 2026s has not. As we noted a year ago, 2026 noteholders will certainly need a significant incentive to convince them to extend, as if the maturity is extended to align with that of the 2028s, they will lose their temporal seniority. Despite the new Arini facility, the market is concretely pricing in that the 2028s will be significantly worse off in any potential transaction, because of the significant gulf in the prices of the senior secured notes which, for all intents and purposes, rank pari passu at present. The 2026s are quoted at 93.9, with the 2028s as low as 34.8.

However, looking at the Hunkemoller uptiering, the Redwood-led creditor group justified the transaction by arguing they were filling a funding need through the provision of a €50 million super senior loan. Now that Victoria’s funding gap has been filled, it is unclear what justification there could be to propose a similar transaction with Victoria. Despite this, the market continues to price it in.

Five Lessons From the Altice France Saga to Navigate Europe’s Liability Management Landscape

As the Altice France saga reaches its endgame following an agreement on restructuring terms with a significant majority of holders, Octus looked into some of the lessons that can be learned from the situation that started with the threat of an LME via drop-downs. Among other things, we concluded that documentary terms matter a lot, as covenant flexibility can be used to upend basic principles of credit investing, temporary seniority could prove to be a significant advantage in certain situations, and cooperation agreements have come to be a critical defensive weapon for investors. The latter is already proving to be a spoke in the wheel for sponsors, some of which are attempting to introduce anti-cooperation clauses in their credit documentation.

Extrapolating from Altice France and a few other high-profile European examples, we also analyzed the risk of LMEs with respect to European companies under their syndicated loans and bonds. While it is true that nearly all the major LME transactions in Europe thus far have been undertaken by companies with capital structures that were predominated by New York law governed debt, that fact paints only a part of the picture. That is because we believe there is a similar risk profile for LMEs with respect to New York law governed bonds and English law governed loans where no consent is needed to execute the transaction, such as a drop-down using existing covenant capacities.

While English law governed loans historically had tighter covenants compared with New York law governed bonds, that distinction has well and truly been eliminated in recent years as evidenced by several of the trends highlighted in our 2024 EMEA Covenants wraps available HERE (for high-yield bonds) and HERE (for leveraged loans). On the other hand, the risk of an LME via an uptiering appears to be elevated under New York law governed bonds, driven by the lack of any pro rata payment protections in bonds that are a feature in loans (albeit the U.S. experience has shown this is not insurmountable), the usual absence of “Serta blockers” in bonds that make it easier to introduce a super senior tranche, and ambiguity regarding the validity of exit consents under English law following the 2012 Assénagon case, at least to the extent they are deemed to coerce the minority, resulting in an expropriation of minority rights for nominal consideration.

Country Garden Provides Lenders With Five Options in Its Restructuring Scheme as It Looks to Divide Banks and Noteholders

Restructuring Framework

Country Garden will implement its offshore debt restructuring through a two-class scheme of arrangement in Hong Kong and/or the Cayman Islands. The structure separates syndicated loan lenders in Class 1 from public noteholders, convertible noteholders and Ever Credit’s bilateral loan in Class 2.
The bank coordinating committee, or CoCom, which holds 49% of the $3.6 billion in syndicated loans, disputes the “logistics and priority” of a $178 million compensation payment. Banks would receive this payment for sharing their 2023 security package with Class 2 creditors. The CoCom’s counsel warned the restructuring is “bound to fail” without its support.
The controlling shareholder will restructure $1.15 billion in shareholder loans separately through a direct arrangement. This involves acquiring a project stake and subscribing for new company warrants.

Options

Country Garden offers creditors five main options:

• Option 1: Cash tender offer:
  • Converts scheme claims to cash through reverse Dutch auction;
  • Maximum tender consideration: $200 million;
  • Maximum bid price: $10 per $100 of claims.
• Option 2: Mandatory convertible bonds (A):
  • Converts scheme claims to zero-coupon mandatory convertible bonds, MCB(A), at par;
  • MCB(A) issuance capped at $2 billion.
• Option 3: Combination of MCB(A) and new notes:
  • Exchanges every $100,000 of scheme claims for $67,000 in MCB(A) and $33,000 in a new medium-term instrument, or MTI;
  • Maximum face value: $5.501 billion for MCB(A) and $2.709 billion for MTI.
• Option 4: Combination of new notes and MCB(B)
  • Exchanges every $100,000 of scheme claims for $65,000 in a new long-term instrument (A), LTI(A), and $35,000 in mandatory convertible bond (B), MCB(B);
  • Serves as a fallback option with no principal cap.
• Option 5: New long-term notes (B):
  • Exchanges scheme claims for a new long-term instrument (B), at par;
  • Principal amount capped at $1.5 billion.

Allocation Mechanism

The restructuring applies pro rata allocation when options exceed caps, following a clear waterfall:

• Option 1 excess reallocates to Option 2;
• Option 2 excess reallocates to Option 3;
• Options 3 and 5 excess reallocates to Option 4, the default fallback for unallocated claims.

Debt/Equity Conversion

The equitization uses two tranches of mandatory convertible bonds:

• MCB(A): Issues up to $7.5 billion total:
  • Conversion price: HKD 2.60 per share, a 505% premium to April 11, 2025, closing price;
  • Mandatory conversion: starts Jan. 1, 2027, at 15% of initial issue size annually, with balance converting at maturity (78 months after the restructuring effective date, or RED).
• MCB(B): Issues under Option 4 without cap:
  • Conversion price: HKD 10.00 per share;
  • Mandatory conversion: starts Jan. 1, 2027 at 10% of initial issue size annually, with balance converting at maturity (114 months after RED).

Both tranches allow voluntary conversion anytime on or after the RED.

Credit Enhancements and Cash Sweep

• Security compensation: Class 1 syndicated loan holders receive $178 million for sharing the 2023 common security package. Cash payment occurs partly on RED, with remainder in installments through a new loan.
• Guarantees and security: New MTI and LTI notes receive guarantee and security package backing. MCBs lack guarantees or security. Details await long-form documentation.
• Cash sweep: Company may use net proceeds from certain offshore investment realizations to prepay MTI through market trades or tender offers. Details await long-form documentation.

Upfront Payments, Consent Fees and New Money

• Upfront cash (MTI): MTI holders under Option 3 receive 2% of principal in cash on RED;
• Early-bird RSA fee: Creditors acceding by May 9, 2025, receive 0.1% of principal as MCB(A);
• General RSA fee: Creditors acceding May 10-23, 2025, receive 0.05% of principal as MCB(A).

Other Key Terms

• Shareholder loan treatment: Settles existing $1.15 billion shareholder loan by:
  • Using $50 million to acquire 60% of Malaysian project Country Garden Pacificview Sdn. Bhd.;
  • Using remaining $1.1 billion to subscribe for new company warrants at HKD 0.60 per share initial strike price.
• Events of default: Default under one new instrument triggers cross-default across other new instruments without carve-out.
• New notes listing: All new securities except MCB(B) will list on Singapore Exchange.
• Amendment threshold: 75% for reserved matters.

Next Milestone

The restructuring outcome remains contingent on securing bank CoCom support. The immediate milestone is the adjourned winding-up petition hearing on Aug. 11, 2025, before the Hong Kong High Court. Country Garden must file affirmations updating the court on restructuring progress at least seven days before the hearing.