China developer Shimao looks to repay US$11.8b debt over 3-8 years: sources

CASH-STRAPPED Chinese developer Shimao Group has proposed a 2-class restructuring plan to offshore creditors to repay US$11.8 billion over a period of 3 to 8 years, according to 2 sources with direct knowledge of the matter and a document seen by Reuters.

Shanghai-based Shimao first missed a public offshore bond obligation last month. With an outstanding US$6.1 billion worth of international bonds, Shimao is the sixth largest issuer among Chinese developers, according to Refinitiv.

The plan will, however, exclude US$2.3 billion offshore debt including offshore project loans, and loans backed by onshore financial institutions or governed by mainland Chinese law.

Shimao did not respond to request for comment.

Unhappy about the proposal, offshore creditors plan to request Shimao to treat all classes of offshore creditors equally, and refrain capital from flowing out from the offshore entities, according to one of the sources.

Creditors also plan to ask the company for an increase in the ratio of the amortised repayment, and a sweetener to enhance the credit profile of the debt, the person said.

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Debtwire first reported on Tuesday (Aug 23) about Shimao’s restructuring terms that were communicated to some investors last Friday.

Under the proposed restructuring terms, Shimao would repay Class A debt, which are US$4.65 billion worth of syndicated loans and guaranteed bilateral loans under an amortisation schedule between 36 to 72 months.

A total of US$7.13 billion Class B debt, which are all the public and private bonds and unguaranteed bilateral loans, would be repaid by 6 tranches of new notes worth 9 to 23 per cent of the claims with maturities ranging between 39 to 93 months. REUTERS