Article/Intelligence
UPDATE 2: Powerlong Bondholder AHG Sends Letter to Co. Warning Against Asset Dissipation, Prepares HK Winding-Up Petition Against Listco
Wed Mar 12, 2025 06:30 AM ET: A holder ad hoc group of Chinese developer Powerlong Real Estate Holdings Ltd.’s USD bonds, that has applied to liquidate the company’s BVI unit, has sent a letter to Powerlong on Tuesday, March 11, demanding that the developer not dissipate onshore and offshore assets held through the BVI entity, two sources familiar with matter said.
The AHG is also preparing to file a Hong Kong winding-up petition against the Hong Kong-listed Powerlong Real Estate Holdings, said the same sources familiar.
The March 11 letter, sent via the AHG’s advisor Latham & Watkins, came after the AHG filed a liquidation application against Powerlong Real Estate (BVI) Holdings Ltd. in the BVI court on March 5 following the expiration of its Hong Kong court-sanctioned offshore restructuring scheme on Feb. 28.
As reported, the AHG holds about 40% of Powerlong’s $2.25 billion offshore bonds, accounting for around 31% of its total $2.8 billion in-scope debt in the previous scheme.
Powerlong Real Estate (BVI) Holdings Ltd. is wholly owned by listco Powerlong Real Estate. Powerlong BVI holds 63% in Hong Kong-listed property management unit Powerlong Commercial Management Holdings Ltd., and 100% in Powerlong Real Estate (Hong Kong) Holdings Ltd. which in turn holds 100% in Shanghai Powerlong Industrial Development Co. Ltd. (上海宝龙实业发展（集团）有限公司), the company’s principal onshore entity.
According to the sources, in the March 11 letter, the AHG put Powerlong on notice and demanded that pending the BVl court’s determination of the winding-up petition, Powerlong, Powerlong BVI and their respective directors must not dispose of – or in any way diminish the value of – any real estate asset Powerlong BVI holds through subsidiaries including Powerlong Shanghai, or any other asset of Powerlong BVI, including the shares it holds in Powerlong Commercial Management.
Further, the AHG demanded that Powerlong not take any action or omit to do anything which may contravene the fiduciary and statutory duties of directors of itself and Powerlong BVI, or with respect to the assets of Powerlong Commercial Management, including its property management contracts, according to the sources.
The AHG’ letter reminded the developer and its directors of their duty to act in good faith. Given the companies’ insolvency, sources said citing the letter, directors must regard the company’s creditor’s interest as the paramount consideration, and it is clearly in creditors’ best interest that the company preserves the share value of Powerlong Commercial Management, which is one of the few valuable offshore assets owned by the company.
The applicants of the BVI liquidation are: Oasis Management Co. Ltd. on behalf of Oasis Investments II Master Fund Ltd., AM Asia Strategies Master Fund LP and PAG-P Asia Fund L.P. (acting through its general partner, PAG-P Management Ltd.).
Powerlong said in a March 7 announcement that it will seek legal measures to firmly oppose the BVI liquidation application. The company is advised by Alvarez & Marsal Corporate Finance Ltd. and Sidley Austin to explore a holistic debt solution.
The BVI petition is BVIHCOM2025/0083. A hearing is scheduled for April 28.
AHG advisor Latham & Watkins declined to comment. Powerlong did not respond to requests for comment.
UPDATE 1: Powerlong Opposes BVI Liquidation Application Against Subsidiary Filed by Holders of $500M 6.25% Senior Notes; Hearing on April 28
Sun Mar 09, 2025 09:07 PM ET: Powerlong Real Estate Holdings Ltd. announced to the Hong Kong stock exchange on Friday night, March 7, that on the same day, three holders of its outstanding $500 million 6.25% senior notes due Aug. 10, 2024 filed a liquidation application against its wholly owned Powerlong Real Estate (BVI) Holdings Ltd. in the BVI court, confirming Octus’ prior story.
The three applicants, Oasis Management Co. Ltd. on behalf of Oasis Investments II Master Fund Ltd., AM Asia Strategies Master Fund LP and PAG-P Asia Fund L.P. (acting through its general partner, PAG-P Management Ltd.), allegedly collectively holding $198.8 million of the 6.25% notes, filed the liquidation application in relation to non-payment of the notes which were issued by the company and guaranteed by Powerlong BVI.
A hearing of the liquidation application is scheduled for April 28.
Powerlong said it will seek legal measures to firmly oppose the liquidation application. The company is actively communicating with the applicants in an effort to negotiate an effective solution, including endeavoring to procure the withdrawal or dismissal of the liquidation application as soon as possible.
The company, its financial advisor Alvarez & Marsal Corporate Finance Ltd. and its legal advisor Sidley Austin will also work with the creditors to explore all feasible options to further pursue a holistic solution to the current liquidity issues with a view to reaching an agreement with the offshore creditors as soon as possible.
In a separate announcement, Powerlong Real Estate released its operating statistics for February, recording contracted sales of 608 million Chinese yuan ($84 million), down 48.3% year over year from CNY 1.177 billion, with contracted sales area down 38.9% year over year to 51,933 square meters from 85,039 sq.m. in February 2024.
As of Feb. 28, the aggregate contracted sales of the group amounted to CNY 1.3 billion, down 43.4% year over year from CNY 2.298 billion. The contracted sales area decreased by 32.4% to 110,264 sq.m. from 163,187 sq.m. in the same period last year.
Original Story 5:47 a.m. UTC on March 6, 2025
Powerlong’s USD Bondholders File BVI Liquidation Application Against Powerlong Commercial Management Holdco, Propose FTI Consulting as Joint Liquidators
Three USD bondholders of Hong Kong-listed Chinese developer Powerlong Real Estate Holdings have filed a liquidation application with the Eastern Caribbean Supreme Court yesterday, March 5, against the BVI holding company of Powerlong’s Hong Kong-listed commercial property management arm, according to two sources familiar with the matter.
The applicants are Oasis Management Co. Ltd. on behalf of Oasis Investments II Master Fund Ltd., AM Asia Strategies Master Fund LP and PAG-P Asia Fund L.P. acting through its general partner PAG-P Management Ltd. All three are members of an ad hoc group, or AHG of Powerlong’s USD bondholders, sources said.
The respondent Powerlong Real Estate (BVI) Holdings Ltd. is wholly owned by listco Powerlong Real Estate and holds 63% in Hong Kong-listed Powerlong Commercial Management Holdings Ltd., Powerlong’s mall management arm.
The applicants intend to apply for an order that Powerlong Real Estate (BVI) Holdings Ltd. be liquidated, and Aaron Luke Gardner, Kenneth Fung and Chow Wai Shing Daniel of FTI Consulting be appointed as joint and several liquidators of the company, said the sources.
The three applicants collectively hold over 25% of Powerlong’s defaulted $500 million 6.25% senior notes due Aug. 10, 2024 issued by Powerlong Real Estate Holdings and guaranteed by its subsidiaries including Powerlong Real Estate (BVI) Holdings Ltd., the sources said.
Powerlong announced on Feb. 28 that the company’s offshore restructuring scheme lapsed that day after not meeting conditions to effect the restructuring. As Octus reported, a bondholder AHG, advised by law firm Latham & Watkins and holding about 31% of Powerlong’s total $2.8 billion in-scope offshore debt planned to file liquidation petition against the company’s asset if the scheme, which was sanctioned by the Hong Kong court in December, lapsed.
The company has engaged Alvarez & Marsal Corporate Finance Ltd. as financial advisor, along with lawyer Sidley Austin, to re-negotiate an offshore restructuring deal. The developer defaulted on its USD bonds in November 2023.
A representative for the AHG declined to comment. Powerlong did not respond to requests for comment.