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UPDATE 6: Sunac Proposes to Restructure CNY 2B 6.8% Onshore Bond With 4 Options, Extend Grace Period; Trading in CNY 2.9B 4.78%, CNY 3.2B 5.6% Bonds Suspended Jan. 13

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Sun Jan 12, 2025 11:22 PM ET: Sunac Real Estate Group Co. Ltd., an onshore subsidiary of Hong Kong-listed developer Sunac China Holdings Ltd., announced to the Shanghai Stock Exchange on Jan. 10 that it is proposing to restructure its 2.018 billion Chinese yuan ($275.3 million) 6.8% corporate bonds “H Sunac 07” and convene a bondholder meeting to vote on certain proposals from Jan. 15 to Jan. 21. Trading in the bond has been suspended from today.

The four-option proposal is set as below:
 

  1. Full-Amount Long-Term Debt Extension to 2034:
    The company is proposing to extend the maturity date of the bonds to June 9, 2034, with 1% principal amount and corresponding interest paid by Dec. 31, 2025. The company proposes to amortize the extended principal amount semi-annually starting from Dec. 9, 2029 in installments of 1%, 2%, 3%, 4%, 10%, 10%, 10%, 15%, 20%, and 25%.
    For interest payment, the company will pay all accrued interest, including any past due payable but unpaid interest, penalties and interest during the future extension period, if applicable, at 1% interest rate in a lump sum on June 9, 2034.
     
  2. Cash Tender Offer:
    Sunac Real Estate offered to tender for cash the bonds at 20% of their respective nominal values. The company plans to use cash not exceeding CNY 800 million to pay for the tender offer no later than Dec. 31, 2025. The tendered and paid bonds will be cancelled accordingly.
     
  3. Payment Via Equity and/or Equity Economic Income Right:
    Hong Kong-listed Sunac China will issue a designated number of new shares to an offshore special purpose trust at a conversion price of every CNY 100 bond for approximately 13.5 shares of Sunac China. Onshore creditors who chose this option will be paid cash proceeds from the newly established offshore trust entity from the disposal of the converted listco shares. The effective date of this option will be no later than Dec. 31, 2025.
     
  4. Debt Settlement With Assets:
    Sunac Real Estate will establish a new service trust and allow holders for units of the trust at CNY 35 per every CNY 100 principal. The maximum total principal amount of the bonds to be accepted under this option shall be about CNY 3 billion. The effective date of this option will be no later than Dec. 31, 2025.

The four-option restructuring proposal was intended to be implemented under 10 tranches of Sunac’s onshore bonds and asset-backed securities, with an outstanding principal amount of CNY 15.411 billion in aggregate, as reported.

Further, as bondholders approved in 2024, a 30-day grace period currently applies to the due Dec. 9, 2024 principal and interest payments under the bond “H Sunac 07”, and the company proposes this time to extend the grace period by over a month to Feb. 28.

In a separate announcement, the company said that it has also applied to the SSE to suspend trading in its CNY 2.881 billion 4.78% onshore bonds “PR Sunac 01” and CNY 3.164 billion 5.6% “20 Sunac 02,” with effect from today, Jan. 13. Bondholders of each “PR Sunac 01” and “20 Sunac 02” have approved the abovementioned four-option proposal, as the company announced on Jan. 3.

UPDATE 5: Sunac Onshore Subsidiary Applies to Suspend Trading in CNY 2B 6.8% Bonds From Jan. 13

Fri Jan 10, 2025 04:04 AM ET: Sunac Real Estate Group Co. Ltd., an onshore subsidiary of Hong Kong-listed developer Sunac China Holdings Ltd., announced (Chinese) to the Shanghai Stock Exchange today, Jan. 10, that it has applied to the exchange to suspend trading in its 2.018 billion Chinese yuan ($275.2 million) 6.8% corporate bonds “H Sunac 07” from Jan. 13, as the company plans to convene a bondholder meeting under the bond for subsequent payment arrangements.

 

UPDATE 4: Trading in Sunac Onshore Subsidiary’s CNY 2.9B 4.78% Bonds Resumed From Jan. 6 as Four-Option Proposal Passed

Mon Jan 06, 2025 02:08 AM ET: Sunac Real Estate Group Co. Ltd., an onshore subsidiary of Hong Kong-listed developer Sunac China Holdings Ltd., announced (Chinese) to the Shanghai Stock Exchange late Jan. 3 that trading in its 2.881 billion Chinese yuan ($397.7 million) 4.78% onshore bonds “PR Sunac 01” resumed from today, Jan. 6 following the approval of the bond’s four-option proposal.

Under the approved proposal, the four options include full-amount long-term debt extension, cash tender offer, payment via equity and/or equity economic income right, and debt settlement with assets.

Details of the finalized four-option proposal are set as below:
 

  1. Full-Amount Long-Term Debt Extension to 2034:
    The company is proposing to extend the maturity date of the bonds to June 9, 2034, with 1% principal amount and corresponding interest paid by Dec. 31, 2025. The company proposes to amortize the extended principal amount semi-annually starting from Dec. 9, 2029 in installments of 1%, 2%, 3%, 4%, 10%, 10%, 10%, 15%, 20%, and 25%.
    For interest payment, the company will pay all accrued interest, including any past due payable but unpaid interest, penalties and interest during the future extension period, if applicable, at 1% interest rate in a lump sum on June 9, 2034.
  1. Cash Tender Offer:
    Sunac Real Estate offered to tender for cash the bond at 20% of their respective nominal values. The company plans to use cash not exceeding CNY 800 million to pay for the tender offer no later than Dec. 31, 2025. The tendered and paid bonds will be cancelled accordingly.
  1. Payment Via Equity and/or Equity Economic Income Right:
    Hong Kong-listed Sunac China will issue a designated number of new shares to an offshore special purpose trust at a conversion price of every CNY 100 bond for approximately 13.5 shares of Sunac China. Onshore creditors who chose this option will be paid cash proceeds from the newly established offshore trust entity from the disposal of the converted listco shares. The effective date of this option will be no later than Dec. 31, 2025.
  1. Debt Settlement With Assets:
    Sunac Real Estate will establish a new service trust and allow holders for units of the trust at CNY 35 per every CNY 100 principal. The maximum total principal amount of the bonds to be accepted under this option shall be about CNY 3 billion. The effective date of this option will be no later than Dec. 31, 2025.

According to the Nov. 27 meeting notices, the company provided the finalized four-option proposal to implement a restructuring for 10 tranches of onshore bonds and asset-backed securities, with an outstanding principal amount of CNY 15.411 billion in aggregate.

 

UPDATE 3: Sunac to Convene Bondholder Meetings in December to Vote on Restructuring Proposal for CNY 15.4B Onshore Bonds

Thu Nov 28, 2024 02:16 AM ET: Sunac Real Estate Group Co. Ltd., an onshore subsidiary of Hong Kong-listed developer Sunac China Holdings Ltd., released on Nov. 27 notices for holders of its 2.881 billion Chinese yuan ($397.7 million) 4.78% onshore bonds “PR Sunac 01” and CNY 1.263 billion 6.48% onshore private bonds “H0 Sunac 03” to convene meetings from Dec. 2 to Dec. 9 to vote on a restructuring plan.

The company released a preliminary four-option plan for its onshore bond restructuring on Nov. 14 and has now provided more details in the finalized proposal in the Nov. 27 meeting notice. The company is seeking to implement a restructuring for 10 tranches of onshore bonds and asset-backed securities, with an outstanding principal amount of CNY 15.411 billion in aggregate, according to the meeting notices.

The finalized four-option proposal is set as below:
 

  1. Full-Amount Long-Term Debt Extension to 2034:
    The company is proposing to extend the maturity date of the bonds to June 9, 2034, with 1% principal amount and corresponding interest paid by Dec. 31, 2025. The company proposes to amortize the extended principal amount semi-annually starting from Dec. 9, 2029 in installments of 1%, 2%, 3%, 4%, 10%, 10%, 10%, 15%, 20%, and 25%.
    For interest payment, the company will pay all accrued interest, including any past due payable but unpaid interest, penalties and interest during the future extension period, if applicable, at 1% interest rate in a lump sum on June 9, 2034.
     
  2. Cash Tender Offer:
    Sunac Real Estate offered to tender for cash the bonds at 20% of their respective nominal values. The company plans to use cash not exceeding CNY 800 million to pay for the tender offer no later than Dec. 31, 2025. The tendered and paid bonds will be cancelled accordingly.
     
  3. Payment Via Equity and/or Equity Economic Income Right:
    Hong Kong-listed Sunac China will issue a designated number of new shares to an offshore special purpose trust at a conversion price of every CNY 100 bond for approximately 13.5 shares of Sunac China. Onshore creditors who chose this option will be paid cash proceeds from the newly established offshore trust entity from the disposal of the converted listco shares. The effective date of this option will be no later than Dec. 31, 2025.
     
  4. Debt Settlement With Assets:
    Sunac Real Estate will establish a new service trust and allow holders for units of the trust at CNY 35 per every CNY 100 principal. The maximum total principal amount of the bonds to be accepted under this option shall be about CNY 3 billion. The effective date of this option will be no later than Dec. 31, 2025.

In addition to “PR Sunac 01” and “H0 Sunac 03,” the other 8 onshore bonds and ABS are: CNY 423 million 6.8% “H6 Sunac RE 01,” CNY 1.397 billion 7% “H Sunac 05,” CNY 2.018 billion 6.8% “H Sunac 07,” CNY 3.164 billion 5.6% “20 Sunac 02,” CNY 1.512 billion 6.8% “H1 Sunac 01,” CNY 1.926 billion 7% “H1 Sunac 03,” CNY 583 million 7% “H1 Sunac 04,” and the originally CNY 314 million 7% senior ABS “H21 Sunac 01 Senior,” according to the meeting notes.

In 2022, Sunac chairman Sun Hongbin agreed to provide joint and several liability guarantees as part of credit enhancement for “PR Sunac 01,” which was originally due April 2022 and has since been extended. According to the Nov. 27 meeting notice, existing credit enhancement for the bonds including “PR Sunac 01” will remain unchanged under the latest proposal.

UPDATE 2: Sunac Applies to Suspend Trading in Onshore Bonds From Nov. 27

Tue Nov 26, 2024 04:20 AM ET: Sunac Real Estate Group Co. Ltd., an onshore subsidiary of Hong Kong-listed developer Sunac China Holdings Ltd., announced to the Shanghai Stock Exchange this afternoon, Nov. 26, that it has applied to the exchange to suspend trading in four tranches of onshore corporate bonds from Wednesday, Nov. 27.

The four bond tranches are: 2.3 billion Chinese yuan ($317.7 million) 7% “H Sunac 05,” CNY 2.018 billion 6.8% “H Sunac 07,” CNY 2.881 billion 4.78% “PR Sunac 01,” and CNY 3.3 billion 5.6% “20 Sunac 02.”

As the company disclosed on Nov. 14, it launched the preliminary restructuring plan for its onshore bonds, offering four options including cash tender offer, payment via equity and/or equity economic income right, debt settlement with assets and full-amount long-term debt extension.

UPDATE 1: Sunac Announces Preliminary Onshore Bond Restructuring Plan, Implementation via Bondholders Meeting; Trading of Bonds Resumes Nov. 15

Thu Nov 14, 2024 08:46 PM ET: Sunac Real Estate Group Co. Ltd., an onshore subsidiary of Hong Kong-listed developer Sunac China Holdings Ltd., announced to the Shanghai Stock Exchange on Thursday afternoon, Nov. 14, its preliminary restructuring plan for its onshore bonds, offering four options including cash tender offer, payment via equity and/or equity economic income right, debt settlement with assets and full-amount long-term debt extension.

As Octus reported earlier in November, Sunac has circulated the four-option preliminary onshore plan to bondholders, aiming to finalize the plan by the end of the month. In the Nov. 14 announcement, the company said it plans to convene bondholders meetings to implement the onshore restructuring.

Trading in four onshore bond tranches: 2.3 billion Chinese yuan ($318.1 million) 7% “H Sunac 05,” CNY 2.018 billion 6.8% “H Sunac 07,” CNY 2.881 billion 4.78% “PR Sunac 01,” and CNY 3.3 billion 5.6% “20 Sunac 02,” resumed today, Nov. 15, according to the Nov. 14 announcement.

Details of Sunac’s released restructuring proposal are as follows:

(i) Cash tender offer: Sunac Real Estate proposes to effect a repurchase by cash offer of the bonds at a price estimated at 18% of their respective nominal values, and it expects that the cumulative cash utilized for the repurchase will in aggregate not exceed CNY 800 million. The maximum principal amount of the bonds to be accepted under this option shall be approximately CNY 4.4 billion, and the cash payment is expected to be made no later than 20 trading days after the approval at the bondholders’ meeting and the completion of the corresponding registration.

(ii) Payment via equity and/or equity economic income right: Subject to the requirements under the listing rules on the Hong Kong stock exchange, Sunac China will issue a designated number of new shares to an offshore special purpose trust (where bonds of every CNY 100 correspond to approximately 13.5 shares of Sunac China, with the total number of new shares expected to be approximately 400 million, to be determined pursuant to the final amount as selected by the bondholders). Sunac Real Estate undertakes to utilize domestic funds equivalent to the net proceeds (excluding intermediary fees and other expenses) from the cash realization of the corresponding shares (which will take 12 months to complete) to repay the bondholders who have selected this option. The estimated principal amount of the bonds to be accepted under this option shall be approximately CNY 3 billion.

(iii) Debt settlement with assets: Sunac Real Estate proposes to entrust the right of return on specific onshore assets held by its indirectly holding subsidiary to a trust company, which will establish a service trust. Sunac Real Estate shall utilize its units in the service trust to exchange at a discount the bonds held by bondholders who have selected this option (where bonds with face value of every CNY 100 will be exchanged for a trust unit of CNY 35). Upon receipt of service trust units, the bondholders will indirectly possess the right of return on specific assets of Sunac Real Estate’s subsidiaries. The service trust is expected to subsist for a term of four years. The maximum principal amount of the bonds to be accepted under this option shall be approximately CNY 4.1 billion.

(iv) Full-amount long-term debt extension: If the company is able to proceed with and complete the three options, Sunac Real Estate shall pay approximately 1% of the principal of the bonds selected for a full amount long-term debt extension in cash; the remaining principal will be extended to June 9, 2034. The principal portion of the bonds selected for this option shall be paid in cash semi-annually starting from Dec. 9, 2029, the interest portion (including any past due payable but unpaid interest, penalties and interest during the future extension period, if applicable) shall be uniformly reduced to around 1%. Interest during the historic and extension period will be accrued until and payable in cash on the final principal payment date, calculated on a simple interest basis without compounding.

Original Story 7:23 a.m. UTC on Nov. 5, 2024

Sunac Proposes Principal Haircut to Restructure CNY 15.4B Onshore Bonds, Offering to Exchange Debt for Cash, Equity, Asset-Backed Trust, Up to 9.5Y New Bonds

Hong Kong-listed developer Sunac China Holdings Ltd. has proposed to its onshore creditors a four-option plan to restructure its 15.4 billion Chinese yuan ($2.168 billion) termed out onshore public bonds, offering to buy part of existing bonds for cash at a 85% discount, swap bonds into its Hong Kong shares-linked instruments, convert bonds to onshore trust shares and extend the bonds for up to 9.5 years, according to a source with knowledge and a source familiar with the matter.

Negotiations with onshore creditors over the proposed terms are ongoing and final terms may change, the sources noted. The company aims to release a finalized proposal by the end of November, according to the source with knowledge.

According to the two sources, details of the four options are as below:
 

  1. Cash Offer at Discount: Sunac plans to use up to CNY 800 million cash to purchase existing bonds at a price of 15% of the bond’s face value; total principal amount of existing debt purchased under the cash offer is estimated to be about CNY 5 billion.
  2. Debt-to-Equity Swap: Sunac will convert a total of CNY 2 billion to CNY 3 billion onshore debt into 300 to 400 million listco’s Hong Kong-listed shares at 8 Hong Kong dollars ($1.03) to HKD 10 per share; onshore creditors will not receive the Hong Kong listco shares directly, but will be paid cash proceeds from a newly established offshore trust entity which will hold and dispose of the converted listco shares.
  3. Conversion to Trust Shares: Sunac also proposes to set up an onshore trust and convert about CNY 2 billion to CNY 3 billion existing bonds into trust shares at a conversion rate of CNY 35 per CNY 100 principal; underlying asset for the trust is government receivables on one of Sunac’s onshore land parcels; the trust will be paid off in four years.
  4. Extension and Coupon Reduction: Sunac plans to term out the remaining amount of the existing bonds, for up to 9.5 years; the new termed out bonds will all pay 1% interest in a lump sum at maturity while principal amortizations will start in the fifth year.

This is Sunac’s second attempt to restructure its onshore public bonds. Sunac’s existing onshore bonds were first extended in 2022 with scheduled amortizations further extended since then. The 2022 extensions and deferrals since then have not involved a principal reduction, as reported.

As reported, trading in four tranches of Sunac Real Estate Co.’s, an onshore subsidiary of Sunac China, corporate bonds has been suspended with effect from Oct. 28.

Sunac declined to comment.