China builder Logan’s restructuring hits snag as lenders revolt

CHINESE developer Logan Group suffered an unexpected setback just days after progress on its restructuring plan, as bank creditors split with bondholders and threatened to liquidate two key units.

A lawyer representing the banks said the lenders may substitute the bondholders in their original winding-up petition at a Hong Kong court hearing on Monday (Jan 15), saying Logan has not provided the information requested. A lawyer representing the bondholders told the court they are seeking to dismiss the petition after signing an agreement with Logan.

A judge said the court will adjourn the case for four weeks, but added that the decision is “very exceptional” and the lawsuit is dragging “too long”. The court had granted the hearing several adjournments previously.

The unexpected turn of events threatens to further prolong Logan’s efforts to work out a viable restructuring deal, offering a contrast to a week ago when the bondholders’ intention to withdraw the case fuelled optimism about the process. It came even as Logan disclosed terms of a debt overhaul blueprint and said it had struck a deal with the bondholder group who filed the original petitions.

Logan said in a filing on Friday that holders of existing offshore notes are being offered four options, including receiving US$15 cash for every US$100 of bond principal with accrued interest waived. The restructuring would involve US$6.65 billion of offshore debt, including US$3.37 billion of dollar notes, it added.

Logan shares pared earlier gains of as much as 16.7 per cent and were last up about 10 per cent. BLOOMBERG