China developer CIFI proposes new restructuring terms to halve offshore debt
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SHANGHAI-BASED property developer CIFI Holdings said on Wednesday (Jan 3) that it has proposed five options with different maturity extensions and haircuts to its bondholders in an effort to restructure its US$7 billion offshore debt.
The debt revamp proposal, which also includes swapping part of the debt for equity, aims to halve the firm’s debt to US$3.3 billion to US$4 billion, it noted in a filing.
The refined terms follow the developer’s proposal in March which had no plan for haircut and maturity extension of less than seven years, highlighting the worsening operational and financing environment since the sector slipped into a debt crisis in mid-2021.
Reuters reported in October that a few developers, including CIFI, had reduced offers to offshore creditors with haircuts of up to 70 per cent to 80 per cent because of the deteriorating environment. CIFI kicked off a debt offshore restructuring process in November 2022 after suspending all its payments.
A refined proposal was delivered “after considering the ...discussions with (the bondholders), the prevailing market conditions and the group’s latest business performance”, CIFI said in the Wednesday filing.
It added that while the property market may face more difficulties, the firm is targeting to deliver 80,000 homes to buyers with the cost of construction and installation expected to be more than 30 billion yuan (S$5.6 billion).
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CIFI, the 19th largest developer in China by sales, said that options to bondholders with equitisation or haircut elements will have a shorter maturity, and most of the maturity extensions will range from two to nine years, with a new coupon rate of 2 to 4 per cent.
All options will be credit enhanced by a package including onshore and offshore assets.
Haitong International and Linklater are CIFI’s advisers. Alvarez & Marsal and Allen & Overy are advisers to the co-ordination committee, and Houlihan Lokey and Kirkland & Ellis are advisers to the bondholders ad-hoc group.
Shares of CIFI jumped 5.9 per cent on Wednesday afternoon session, outperforming a 1.8 per cent decline in the Hang Seng Mainland Properties Index. REUTERS
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