Builder Jinke reveals details of court-supervised debt plan

CHINESE developer Jinke Property Group has revealed details of its court-supervised onshore debt restructuring to some of its creditors, said sources familiar with the matter.

Under the plan, the company would make cash payments of as much as 50,000 yuan (S$9,284) to each bondholder, according to the sources. Those payments would come after it receives 1.8 billion yuan from a consortium of two local firms serving as a white knight for the restructuring, the sources said, which is still subject to creditor and court approval.

The remainder of the debt would be repaid via a debt-to-equity swap and a trust product, according to the sources. Each bondholder would receive about 2.5 shares of Jinke and an expected 1.9 yuan in the trust for every 100 yuan of debt principal, the sources said. Jinke shares were trading at 1.64 yuan on Monday (Dec 23) morning, according to Bloomberg-compiled data.

If the plan is successful, Jinke, which was once China’s 25th largest developer by contracted sales, could offer a restructuring road map for other companies struggling to find ways to repay debt. But if creditors do not give their backing, the company’s risk of liquidation could rise.

Under the plan, Jinke would set up an eight-year trust for debt payment backed by shares in 20 subsidiaries. The 20 subsidiaries manage more than 200 Jinke projects across the country, one of the sources said.

There could also be a second round of repayment via shares and the trust, but details are unclear, according to the sources.

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Jinke expects to reduce its liabilities-to-assets ratio to around 30 per cent post-restructuring from more than 90 per cent, one source said. The restructured Jinke would continue to manage the property projects backing the trust product, according to the plan. The company would provide around 700 million yuan to fund construction and delivery of some of these projects, the source added.

Jinke did not immediately reply to a request for comment.

The builder said in 2022 that it missed a payment on a local bond. That was followed by a company disclosure the next year that a construction firm vendor had filed a reorganisation petition against it. Jinke’s only US dollar bond was indicated at around 5.8 US cents on the US dollar on Friday, according to Bloomberg-compiled data.