Sunac wins court approval for offshore debt restructuring plan

SUNAC China Holdings won court approval for its multibillion-dollar offshore debt restructuring plan, clearing the last key hurdle for it to become the country’s first major developer to overhaul such liabilities.

A Hong Kong court judge ruled in favour of Sunac’s debt blueprint after a so-called sanction hearing on Thursday (Oct 5). The developer secured support for the plan two weeks ago from creditors representing 98 per cent of claims that voted.

The court’s sign-off sets Sunac apart from major industry peers such as China Evergrande Group which are still struggling to find a viable debt-restructuring road map as an unprecedented housing crisis unfolds.

Sunac was China’s third-largest builder by contracted sales in 2021, just as a government-driven effort to limit real estate leverage growth set off a plunge in new-home purchases and a cash crunch that’s resulted in record amounts of offshore bond defaults. The industry has weakened anew after showing signs of recovery earlier this year.

The developer, now ranked 16th, first defaulted on a US dollar bond in May 2022 and unveiled its offshore debt restructuring plan this past March. Sunac’s proposal covers an estimated US$10.2 billion of creditor claims, US$5.7 billion of which would be compensated with new US dollar bonds. The remainder will be settled through getting shares of its property-management arm and convertible notes.

Sunac sought Chapter 15 bankruptcy protection in New York last month, a move sometimes required in finalising a restructuring. Its shares, though down 53 per cent this year, have more than doubled since the start of September – easily the best performer in a gauge of Chinese developers. BLOOMBERG